SBF Trial – Nishad Singh kicks off week 3 by confessing to stealing customer funds for straw political donations

The third week of SBF’s trial has kicked off with the prosecution bringing former FTX engineering director Nishad Singh, another key member of the exchange’s leadership and SBF’s inner circle.

Singh’s testimony comprised further explosive allegations regarding the cryptocurrency exchange’s involvement in illegal political donations, including the fact that his accounts were used without prior permission.

Singh told the courtroom that Alameda would send him stolen customer funds, which would then be spent from his account for political donations. He further divulged that the stolen funds were used for investments and other spending.

Stolen funds donated to politicians

Singh told the courtroom that former FTX executive Ryan Salame — who has already pleaded guilty to his role in the campaign finance scheme, allegedly manipulated Singh’s bank account to funnel money towards various political causes. Salame would then seek Singh’s approval for these transactions through encrypted Signal chats.

Speaking before the jury, Singh candidly admitted:

“My role was to click a button.”

In addition to the electronic transactions, Singh disclosed that he had provided signed blank checks to a team led by SBF’s brother, Gabriel Bankman-Fried, who used them to make political contributions.

Singh told the court that throughout this process, he was acutely aware that these funds were originating from FTX’s customer accounts. He also revealed that the contributions — primarily directed towards center-left recipients — were made in his name for the sake of optics.

Singh explained:

“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.”

During his testimony, Singh presented himself as a credible and confident witness, occasionally delving into technical jargon that prompted questions from the judge. He recounted his initial acquaintance with SBF in high school, followed by his employment at Alameda in 2017, and later at FTX, after a brief stint at Facebook.

Lavish spending

During Singh’s testimony, prosecutors presented a spreadsheet dated March 2023, which revealed that FTX had inked a staggering $1.1 billion in endorsement deals. This roster of agreements included high-profile naming rights, such as the Miami Heat’s basketball arena.

Notable figures featured in these deals included NFL quarterback Tom Brady, supermodel Gisele Bundchen, basketball sensation Steph Curry, and renowned comedian Larry David. Prosecutors also showed the jury a photograph depicting SBF at the 2022 NFL Super Bowl, with celebrities Katy Perry, Orlando Bloom, and Michael Kives — the head of venture capital firm K5 Global.

Singh disclosed that SBF allocated a substantial $700 million to K5, utilizing funds prosecutors allege were stolen from FTX customers. He said that SBF was drawn to the prospect of celebrity connections by investing in the venture capital firm, which he believed to be a “one-stop shop” for such a network.

Singh recounted how another FTX executive had justified these endorsement deals as a strategy to boost user growth. However, Singh expressed his reservations, deeming these arrangements to be excessively extravagant.

Singh said that he urged SBF to terminate these deals in September 2022 after discovering the shortfall in customer funds. He recounted telling the former billionaire:

“This is crazy; we need to cut as much of them as we can.”

However, SBF told Singh he was being “shortsighted” and was reluctant to cut any of the endorsements despite facing an $8 billion shortfall that caused its collapse less than a month later.

Singh also told the jury that he had been uncomfortable with SBF’s excessive spending habits and lavish investments, such as pouring $500 million into AI startup Anthropic and funding cryptocurrency mining operations in Kazakhstan.

Singh also revealed that there had been a dispute over SBF’s real estate investments, specifically about whether to purchase a luxury penthouse for a group of ten FTX and Alameda employees.  He said that SBF admired the apartment, but some found it extravagant and costly.

However, in the end, SBF went ahead with the purchase despite the disapproval of his colleagues and friends, who were reluctant to pursue the matter further.

Adderall

Meanwhile, SBF’s lawyers claimed their client had not received his prescribed Adderall medication during the trial. The defense argued that the lack of medication — used to treat attention-deficit hyperactivity disorder — was impairing SBF’s concentration and potentially hindering his ability to participate in his own defense.

The defense further argued that the trial be delayed until SBF is properly medicated.

However, Judge Lewis Kaplan denied the defense’s request to delay the trial and provide the medication, citing a lack of current medical evidence to support the claim. Kaplan said:

“I can’t have lawyers coming and giving drugs to people on trial because someone says they need it.”

SBF’s defense team is expected to cross-examine Singh when the trial resumes on Oct. 17.

As the trial unfolds, it continues to captivate legal observers and cryptocurrency enthusiasts alike, with each day unveiling new revelations about the inner workings of FTX and its founder, Sam Bankman-Fried.

The 28-year-old Singh, who has cooperated with the government, became the third key member of SBF’s inner circle to testify against him during this trial.

The other two key witnesses from his inner circle are Gary Wang, the former FTX chief technology officer, and Caroline Ellison, the former chief executive at FTX’s sister hedge fund, Alameda Research, who also took the witness stand.

Prosecutors have accused him of misappropriating billions of dollars in FTX customer funds, deceiving investors, and misleading lenders associated with the exchange and Alameda. SBF has consistently denied any wrongdoing, asserting that his actions were guided by a sincere intention to navigate the exchange through a crisis.