NEW YORK – Sam Bankman-Fried’s defense team tried yet again to chip away at the credibility and narrative of a star witness – this time former FTX head engineer Nishad Singh.
But while attorneys for the crypto exchange’s former CEO cast some doubt about Singh’s character, they did little to debunk his seemingly damning testimony from Monday when Singh, the last of the so-called “inner circle,” depicted an organization in financial chaos and a leader willing to defraud customers to prop up his debt-riddled balance sheet.
“I knew that in June, I had observed Alameda borrowing in large amounts in a way that didn’t meet the expectations I had and what I’d been told about how Alameda would use things like ‘Allow Negative,’” Singh responded at one point when Bankman-Fried lawyer Mark Cohen asked if he’d done anything wrong prior to September 2022. “Even in June, when I suspected there was wrongdoing there, I took cues from the people around me and didn’t pursue it further. In September, I understood not only had there been an enormous amount of borrowing but that the money wasn’t there at all.”
The 31-year-old SBF, as he is also known, faces seven felony charges, including wire fraud, conspiracy to commit money laundering and campaign finance violations. Prosecutors say that Bankman-Fried used customers’ funds for luxury real estate purchases and other expenses and to prop up FTX’s troubled trading arm, Alameda Research. If found guilty, he could spend decades in prison.
Singh, Ellison and Wang are testifying for the prosecution as part of a plea agreement that they hope will keep them out of prison. Defense attorneys over the last two weeks tried to diminish Wang and Ellison’s effectiveness as witnesses.
During one crushing sequence, Singh noted that in September 2022, as FTX’s woes mounted, Singh considered resigning because he felt that he was “participating in something heinously criminal.”
He added: “To keep running the business without divulging to others that there was a hole, I would be betraying customers that deposited their money into the hole, betraying my other employees. The scale of wrongdoing was enormous.”
An excessive spender?
In the morning cross-examination, Bankman-Fried’s defense team contested the prosecutors’ image of Bankman-Fried as a spendthrift, with Cohen getting Singh to admit that, for example, FTX’s $135 million sponsorship of the Miami-Dade arena – the home court of the NBA Miami Heat – was spread over 19 years. Cohen also prompted Singh to acknowledge that FTX’s $200 million stake in investment firm K5 had benefits.
Queried about the penthouse that was a source of tension, Singh admitted that he and his girlfriend had the nicest suite. Singh noted that he had considered moving out many times, but Cohen got him to admit that he hadn’t.
Cohen also asked Singh, who had previously been a billionaire on paper, whether the $30 million purchase of the Orchid penthouse apartment in the Bahamas was expensive for a group of billionaires and millionaires. Singh responded, “The expense would be the same no matter the wealth of the people living in it.” Moreover, Singh mentioned that he didn’t know what was reasonable for billionaires to do since he didn’t know other billionaires. (In the overflow room, people laughed.)
Cohen then homed in on June 2022 when Caroline Ellison, Gary Wang, Adam Yedidia and Bankman-Fried started focusing on a bug in FTX’s software base that overstated FTX’s obligation to customers. Cohen asked Singh if it was fair to say that he’d told prosecutors prior to the trial that he’d “had a surprising amount of haziness when trying to recall events in June and July 2022?”
Singh acknowledged that there was a lot that he didn’t remember from that period.
Throughout its cross examination, the defense brought up inconsistencies between the notes on Singh’s meetings with prosecutors and what Singh had said in court, aiming to sow doubt about his testimony. But in redirect, U.S. attorney Nicolas Roos asked Singh whether he took those notes himself, whether anyone ever asked him to review the notes for accuracy, and whether he had read the entirety of the notes.
Singh answered no to each of those questions, undermining the credibility of the notes as evidence and combatting the defense team’s attempts to portray Singh as hazy about details. (On Unchained, two recent attorneys explained that notes taken during initial meetings with a potential witness are not transcripts and therefore may be inaccurate, which may explain why Singh often did not recall saying the things mentioned in the notes.)
Impetus behind political donations
Cohen tried to counter Singh’s testimony from the previous day about how, under the direction of SBF and Ryan Salame, he had violated campaign finance laws. Cohen got Singh to testify that he had been excited about political donations as early as 2018. Cohen asked Singh whether Singh was required to be the face of FTX’s political spending, to which he responded no.
At one point, Cohen asked Singh about various amounts of money taken out of the exchange or Alameda in his name. For the funds he received to make political donations, Singh said they were loans “in a loose sense.”
Under redirect by the prosecution, Singh explained that while he expected and wanted to pay back the loans, no formal agreement existed requiring as much. “There wasn’t paperwork, there wasn’t a discussion of the transfers to me that I was a part of, and when I requested loan sheets, like lists of loans that Alameda had given, when asked from [FTX Head of Finance] Jayesh, from Caroline, and from Can Sun…,” he said. “They did not include many of these transfers as obligations I had to pay back. So they weren’t really loans.”
Challenging Singh’s credibility
After Day 1 of his testimony, Singh had seemed to be the most vocal of all the insiders about Alameda’s “borrowing” of FTX customer funds as wrongdoing. However, in his cross-examination, Cohen chipped away at Singh’s halo by asking about Singh’s $3.7 million purchase of a home in Orcas Island in Washington State in October 2022—after he knew that Alameda owed FTX customers $13 billion. Singh testified that he borrowed from FTX to purchase the home.
However, in the redirect, the prosecution elicited from Singh the fact that he had forfeited the home. Singh explained, “I bought it at a time when I understood that I was putting myself ahead of customers by doing so. I was embarrassed and ashamed.” Singh said he forfeited the home because it was one small way to right a massive wrong.
Prosecution goes on offense
The defense spent quite a while asking Singh about something known as auto-deleveraging, which had to do with a contingency plan that took place at certain times of trading if the exchange’s preferred method for dealing with those instances was not possible. After one of these undesirable occurrences, which could be harmful to customers, Singh committed some code, and in a comment related to it, wrote “be careful not to liquidate PMM,” which referred to Alameda.
While it may have seemed that this could be a justification for how Alameda came to have a $13 billion liability to FTX, in the redirect, the prosecutor asked Singh if the $13 billion hole that Singh found out about in September was a result of auto-deleveraging. “I fail to see the relationship between them. No,” he responded.
Questioning Singh’s mental state backfires
Cohen, perhaps in an attempt to discredit Singh’s testimony, asked him about his mental state at various times, starting with his evening conversation with SBF on the Orchid’s balcony in September 2022. Singh testified that he had been anxious and stressed saying, “I was very nervous. I was awaiting an explanation and eventually an apology. I was pacing.”
Cohen then asked about how Singh had said that late in November, he was suicidal. Singh responded, “And for a few months after”—which, due to the severity of the statement may have instead underscored how serious FTX’s collapse was.
At another time, he asked Singh if he had considered resigning from FTX or Alameda prior to the fall of 2022. Singh responded yes, enumerating multiple previous instances. During its redirect examination, the prosecution asked how his thoughts of resigning in the fall of 2022 differed from those previous instances. He responded that the prior times concerned only his own worries, but that this time was different because he knew staying would mean he would participate in “something heinously criminal.”
SBF’s proximity to the world’s elite
After Singh finished his afternoon testimony, Richard Busick, a special agent with the Federal Bureau of Investigation (FBI) for the past two decades, was questioned about his cell phone analysis of Bankman-Fried’s mobile, likely to establish the jurisdiction for the Southern District of New York.
Comparing times when Bankman-Fried’s phone was active in Manhattan against emails regarding work events in Manhattan, prosecutors showed that the dates and locations of those events corresponded to times when SBF’s cell phone was in those areas.
It also gave a sneak peek into the hobnobbing SBF was doing with the world’s elite in the months before FTX’s collapse. On his calendar were people such as H.E. Yasir Al-Rumayyan, governor of Saudi Arabia’s sovereign wealth fund, New York City Mayor Eric Adams, New York Governor Kathy Hochul, and former U.S. President Bill Clinton.