FTX’s Political Donations Came From Stolen Customer Funds, Testifies Company Insider Nishad Singh

Nishad Singh, red tie, arriving at court in New York on Monday to testify in the fraud trial of Sam Bankman-Fried.
Nishad Singh, red tie, arriving at court in New York on Monday to testify in the fraud trial of Sam Bankman-Fried.

Summary

The former FTX engineering director said he committed crimes alongside Sam Bankman-Fried.

FTX made political donations with stolen customer funds using signed blank checks and access to employee bank accounts, former FTX executive Nishad Singh testified in court Monday.

Singh told the jury that former FTX executive Ryan Salame, who has pleaded guilty to his role in the campaign-finance scheme, logged into his bank account and entered the details for the money to be sent to political causes. Then Salame would ask Singh to approve the transaction in an encrypted Signal chat, he said.

“My role was to click a button," said Singh. For other donations, he said he gave signed blank checks to a team led by Sam Bankman-Fried’s brother that used them for the contributions.

He said he was aware of—and uncomfortable with—being a straw donor, and knew that his donations came from customer funds.

Singh said the contributions, largely to center-left recipients, were made in his name for optics purposes. “It was useful for my name to be associated with some donations, even if the end recipient understood they were really coming from something else," he said.

Former FTX engineering director Singh is cooperating with the government, the third member of Bankman-Fried’s inner circle to testify against him since the trial’s early October start. Prosecutors have previously called as witnesses Gary Wang, FTX chief technology officer, and Caroline Ellison, the former chief executive at FTX’s sister hedge fund, Alameda Research. Ellison is also Bankman-Fried’s ex-girlfriend.

Bankman-Fried, 31 years old, faces seven counts of fraud and conspiracy. Prosecutors have accused him of misusing billions of dollars in FTX customer funds and lying to investors and lenders of the exchange and Alameda. Bankman-Fried has denied wrongdoing. His lawyers have said he acted in good faith in trying to steer the exchange through a crisis.

Singh, 28, testified clearly and confidently, occasionally veering into technical language that drew questions from the judge. Singh said he first met Bankman-Fried in high school, when he was close friends with the defendant’s younger brother. In 2017, after briefly working at Facebook, he went to work with Bankman-Fried at Alameda, then later joined FTX, he said.

Singh told the jury that he committed financial crimes, including defrauding customers and investors, while working at the crypto exchange. He said he objected to what he viewed as excessive and lavish spending by Bankman-Fried.

Prosecutors walked Singh through a spreadsheet of endorsement agreements, which included deals with the Miami Heat’s arena, Major League Baseball, comedian Larry David and former quarterback Tom Brady and model Gisele Bündchen. A lawyer representing the celebrities didn’t respond to a request for comment.

Some of the spending directed by Bankman-Fried included investing in venture capital, such as $500 million for Anthropic, an artificial intelligence startup, and an investment in cryptocurrency mining in Kazakhstan.

“When I was your age, mining was digging in the ground for gold and coal," said U.S. District Judge Lewis Kaplan, before asking Singh to explain further.

Singh told jurors that Bankman-Fried was wowed by the celebrity connections he could gain with an investment in venture-capital firm K5 Global. Prosecutors introduced as evidence a photo of Michael Kives, a K5 co-founder and former Hollywood agent, with a grinning Bankman-Fried and celebrities including actor Orlando Bloom and singer Katy Perry. K5 didn’t respond to a request for comment.

Bankman-Fried would invest $700 million in the firm, using funds prosecutors say were stolen from FTX customers. “I was worried that partnering with K5 and giving them this much money would be really toxic to FTX and Alameda culture," Singh said, adding he brought up his concerns with Bankman-Fried.

While talking about various real-estate investments, Singh also told jurors that there was substantial disagreement about whether to purchase a luxury penthouse for a group of 10 FTX and Alameda employees. He said Bankman-Fried—a fan of views—liked the apartment, but others felt it was expensive and ostentatious.

Singh said he broached the disagreement with Bankman-Fried. “Sam said he would pay 100 million for the drama to just be done with and go away," Singh told the jury. “Which I took as a pretty clear sign I should shut up."

Bankman-Fried’s lawyers are expected to cross examine Singh on Tuesday.

Meanwhile, lawyers for Bankman-Fried raised an unusual circumstance in a court filing Sunday night, complaining to Kaplan that their client hasn’t been getting his prescribed Adderall medication during the trial day. The drug is used to treat attention-deficit hyperactivity disorder.

The lack of access to Adderall is impairing Bankman-Fried’s concentration, his lawyers said. If the situation continues, he will be unable to participate meaningfully in the presentation of his defense, including in deciding whether he should testify, they said.

James Fanelli contributed to this article.

Write to Corinne Ramey at corinne.ramey@wsj.com

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