In devastating testimony for the defense, former FTX head of engineering Nishad Singh detailed instances of bullying behavior from ex-CEO Sam Bankman-Fried and numerous times when SBF used customer funds to fuel his spending spree.
Singh described an organization that allegedly defrauded FTX customers by freely spending customer assets on ill-advised investments, sponsorships and political action, all at Bankman-Fried’s direction, and a leadership style that browbeat and belittled anyone who disagreed with him or expressed concerns. Singh’s testimony echoed comments by the prosecution’s other two star witnesses during the first two weeks, former Alameda CEO Caroline Ellison and former FTX Chief Technology Officer Gary Wang.
“I was blindsided and horrified. I felt really betrayed, that five years of blood, sweat, and tears from me and so many employees, driving towards something that I thought was a beautiful force for good, had turned out to be so evil,” Singh said. “I knew that customers were betrayed. So many customers had to put their trust in us.”
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.
Singh, who came across as earnest and as having a strong conscience, told jurors that SBF continued to spend excessively even after learning of an $8 billion hole in Alameda’s balance sheet that mushroomed as crypto markets slumped following the collapse of the Terra Luna ecosystem in May 2022. By September, the deficit had reached $13 billion.
“I learned of the hole, and even after that, implicitly and explicitly, I green-lit transactions that I knew must have been digging the hole deeper and therefore coming from customer funds,” Singh said.
Singh, who was Bankman-Fried’s younger brother’s friend and had known SBF since high school, was intimidated by the defendant shortly after joining Alameda in 2017, but he lost faith in SBF amid his dismissiveness and seeming dishonesty toward the company’s financial management. “I had a lot of admiration and respect for him,” he said. “Over time I think a lot of that eroded, and I grew distrustful.”
Excessive spending
Singh described his increasing concern about Bankman-Fried’s spending even as the company sank deeper into debt.
“I’d frequently go to Sam and express that I thought that… the spend was too large or that it didn’t make sense – in essence, a bad business decision – and I also would express that I felt kind of embarrassed and ashamed of how much it all wreaked of excess and flashiness. It didn’t align with what I thought we were building a company for.”
Some examples of the excess were that Alameda had invested $1.5 billion into Bitcoin miner Genesis Digital Assets in early 2022, as well as $500 million into AI startup Anthropic and $200 million into incubation firm K5, founded by Michael Kives.
The K5 deal accelerated after SBF attended a Super Bowl-related party in Los Angeles with several top A-list celebrities: Hillary Clinton, Doug Emhoff, Katy Perry, Orlando Bloom, Kate Hudson, Leonardo DiCaprio, Jeff Bezos, [Netflix CEO] Ted Sarandos, Kendall Jenner, Kris Jenner, and Corey Gamble.
Singh said SBF described the event as “the most impressive collection of people he ever had in one location,” adding that the FTX co-founder told him that if asked, K5 could probably arrange an FTX dinner with Elon Musk, former President Barack Obama, Rihanna, and Mark Zuckerberg in a month.
When Singh saw the term sheet with K5, which proposed hundreds of millions of dollars of bonuses to Kives and his partner Bryan Baum as well as $1 billion for their VC firm, he was shocked. “I was worried that partnering with K5 and giving them this much money would be really toxic to FTX and Alameda culture; that everyday I was actively trying to espouse – I felt we all were – that politicking and social climbing was not going to be rewarded, and here we were rewarding people in exorbitant amounts,” Singh said.
He added that he asked SBF to use his own personal money for the deal so that it wouldn’t affect the culture of FTX.
Sponsorships and real estate
Singh also detailed his shock at the $1.1 billion FTX spent on sponsorships, such as the naming rights for the Miami Heat basketball arena and endorsements from top celebrities, including Steph Curry, Tom Brady, Giselle Bundchen, and Larry David. He was also uncomfortable with the spending on real estate. For instance, before they movedinto their luxury penthouse apartment, Bankman-Fried and his future roommates argued over where to live.
The group had initially chosen a more modest apartment, but SBF wanted to check out the penthouse. “Sam really liked this one,” Singh said. “Sam’s a fan of views. And there was substantial disagreement about if we should go with it, in part because it was really expensive, in part because it’s just super ostentatious.”
When discussing it with SBF, Singh said, “Sam said that he would pay $100 million for the drama to just be done with and go away, which I took as a pretty clear sign that I should shut up.”
Asked to ‘Fool Regulators’
In September 2022, Singh had a discussion with the defendant about the lack of collateral Alameda had to support its futures trading. Singh determined that Alameda was short $10 billion of what was needed to support its trading positions and relied on its $65 billion line of credit to make up for this multi-billion-dollar deficit.
Bankman-Fried instructed Singh to transfer SBF’s, Ellison’s, and Wang’s personal SRM tokens (which were locked, and therefore illiquid) into Alameda’s main trading account. Singh said the transfer was meant “to fool” the CFTC (U.S. Commodity Futures Trading Commission) by making it seem as if Alameda had posted more collateral than it had.
Singh did not execute the transfer saying that “it felt wrong.” Singh said, “I was fine giving up my personal assets. I’d taken on debts and given up my assets for the company countless times, but I understood the purpose of this exercise to be, you know, to fool a US regulator and to fool employees of the company, and I wasn’t comfortable with that.”
Late-night balcony talk
Singh, who was freaking out about FTX’s inability to meet customer withdrawals, had an evening talk with the defendant in the fall of 2022 on the palatial balcony of their luxurious apartment, which featured a swimming pool and several lounge chairs. In this talk, Singh said he was worried about Alameda’s “NAV,” which was his euphemism for the hole, and Bankman-Fried responded, “I’m not sure what there is to worry about. NAV is fantastic by almost any measure.”
When he asked how much Alameda was short by, SBF said, “That is the wrong question to be asking,” and then proceeded to talk about how much he could “deliver” within various timeframes: around $5 billion in 24 hours, “substantially more” in several weeks, and after that, “substantially more.”
At some point, Singh said, “Jesus F-ing Christ,” and Bankman-Fried said that this shortcoming of several billion dollars had been taxing him about 5-10% of his productivity, while Singh responded he thought it would hit him a lot harder.
The prosecutor asked Singh why he didn’t leave. He said he considered leaving the company every day, but said, “How could I live with myself if my departure precipitated a fall that might have been unavoidable?”
Singh detailed how he tried to cut costs at the company and said that at first he was “pleasantly surprised” and felt he was able to cut a couple hundred millions dollars in spend. But further conversations with SBF made him realize that what Singh felt was an “obligation” was “not being taken seriously,” since SBF was unwilling to cut endorsement and sponsorship deals that meant another $1 billion was “headed out the door.”
SBF’s ‘Tells’
After SBF returned from his Middle East fundraising trip, Singh, who so rarely met with the former FTX CEO one-on-one said it was an annual occurrence, met with him privately again—this time in one of Sam’s apartments. After beginning by stating he was not doing well and was thinking of quitting, he asked SBF how it was going with “NAV.” SBF, who was standing in the kitchen with his back against the fridge, said he could raise anywhere from $0 to $5 billion. He told Singh the main plan was to make FTX a success, and said to Singh, “That depends on a huge part in you. You’re one of the few people, Nishad, that can take that kind of work off my plate so I can focus on the rest of this.”
Singh admitted he had been afraid to ask SBF for the meeting and said that he felt the defendant was “very mad” and that the meeting was “tense” with “long periods of silence.” Then he listed some of what he called “Sam’s tells” for when he is upset, and how SBF showed them in this conversation: “puffed out his chest … hands back, he was grinding his finger, closing his eyes, grinding his teeth or tongue in his mouth, and when he opened them to respond, he would sort of glare at me with some intensity. … I ended up apologizing to him at the end for asking for the meeting equate I could tell it was so unwelcome.”
Campaign finance violations
Singh pleaded guilty to charges related to violating campaign finance laws, which involved legging donations being made in his name even though they were funded from Alameda or as a borrow from FTX. Some of these loans were used for Bankman-Fried’s political donation campaign and to fund his brother’s political action committee, Guarding Against Pandemics (GAP).
Additionally, he said he participated in falsifying and backdating FTX’s 2021 revenue numbers for auditors. SBF wanted FTX’s revenue, which stood at $950 million, to be $1 billion, because FTX’s revenue would show up on a spreadsheet that would be presented to investors. SBF proposed creating fake revenue, backdated throughout the year, from charging for offering staking services of Serum.
Final days before collapse
When withdrawals began to accelerate on November 5, Singh became “concerned that this might spell doom and the end of our attempts to make customers whole, and the end of the ongoing fraud,” since he knew customers, who expected full access to their assets, did not know that they were not backed.
Although Singh seems to have had a strong sense of right and wrong, even he ended up doing things he wasn’t proud of. Around this time, he sent SBF a Signal message, asking, if he “could make some fictitious transactions such that it looked like I had paid off this amount that I owed.”
Singh explained that he had meant backdated transactions, which was “something I knew could be done because Sam had proposed … once to me in other contexts.” Singh acknowledged this, “felt wrong,” and said he wasn’t trying to excuse himself, but said, “I was in different levels of having a right mind throughout these days.”
On Nov. 6, he said a war room gathered in one of Bankman-Fried’s apartments attended by Singh, SBF, Ellison, Wang, Ramnik Arora and, by phone, head of FTX Digital Markets Ryan Salame, who all were workshopping a draft tweet thread by Bankman-Fried. “There was a point when they were discussing whether or not to characterize FTX as solvent or well capitalized. I felt very uncomfortable with both definitions. I felt neither was true.”
Singh leaned over the couch to say something like, “I’m not comfortable with this. I’m recusing myself.” He testified, “They acknowledged in a kind of annoyed way and proceeded.” Singh had wanted to halt withdrawals rather than make a statement about FTX’s strength. He said, “I’d overheard in the conversation opinions that these tweets should be really strong, which I understood to be a euphemism for particularly misleading in such a way that will quell fears definitively.”
On Nov. 8, via Signal chat, Singh and Bankman-Fried discussed the fact that lawyer Dan Friedburg was angry and that Salame might resign. Singh then wrote, “they may need to know that it wasn’t a ton of people orchestrating it.”
In testimony, Singh explained, “I really wanted Sam to clarify what everyone’s role in this fraud was … I wanted him to clarify that I wasn’t orchestrating it and that I learned about it really late. I wanted Sam to clarify that he was orchestrating it. … I was certainly guilty for participating in it since September, but don’t feel I made the hole. And secondly, I wanted the state of my relationship with these people I loved and tried to do right by to remain intact and for them not to hate me.”
It was during this part of his testimony that Singh revealed he had been “suicidal for days.” Shortly after, his direct testimony ended, meaning that Tuesday morning, he will face his cross-examination.
