SBF Trial Week 3 Former FTX Head of Engineering Nishad Singh appears in court, confesses to embezzling user funds for political donations.

Third Week of SBF Trial Ex-FTX Head of Engineering Nishad Singh Admits to Embezzling User Funds for Political Contributions in Court Appearance

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

Author: Assad Jafri, CryptoSlate

Translation: bayemon.eth, ChainCatcher

As former FTX engineer Nishad Singh takes the stand, the third week of the SBF trial begins. Singh is said to be another important member of the exchange leadership and the core circle of SBF.

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Singh’s testimony further confirms explosive allegations of FTX’s involvement in illegal political donations, including the unauthorized use of customer account funds.

In his testimony, Singh points out that Alameda would send him stolen customer funds, which he would then use for political donations from his own account. In addition, he reveals that the stolen funds were used by SBF for investments and other expenses.

Embezzling funds, donating to politicians

Singh says in court that former FTX executive Ryan Salame manipulated his bank account to funnel funds to various political activities, and he admits his role in the campaign fund scheme. Salame then sought Singh’s approval for these transactions through encrypted Signal chats.

In front of the jury, Singh candidly admits:

“My responsibility is to click buttons and approve transactions.”

In addition to electronic transactions, Singh also reveals that he provided Gabriel Bankman-Fried, SBF’s brother, with signed blank checks, which Bankman-Fried’s team used to deliver political contributions.

In his testimony, Singh points out that throughout the process, he was well aware that the funds came from FTX’s customer accounts and that these political donations, in the name of a “good political image,” were directed towards center-left politicians. Singh explains:

“Even if the recipient knows that these donations come from elsewhere, it’s still useful to associate my name with some of the contributions.”

During the testimony, Singh appeared sincere and confident, occasionally using professional terminology to question the judge. He described his first encounter with SBF during high school, followed by his employment at Alameda in 2017, a brief stint at Facebook, and then being hired by FTX.

Lavish spending, crazy investments

In Singh’s testimony, the prosecutor presented an electronic spreadsheet dated March 2023, which showed FTX signing endorsement agreements worth $1.1 billion. These agreements included high-profile naming rights, such as the Miami Heat basketball stadium.

The celebrities involved in these transactions include NFL quarterback Tom Brady, supermodel Gisele Bundchen, basketball star Steph Curry, and famous comedian Larry David. The prosecutor also showed the jury a photo of SBF with celebrities Katy Perry, Orlando Bloom, and venture capitalist Michael Kives from K5 Global at the 2022 NFL Super Bowl.

Singh revealed in court that SBF allocated $700 million to K5, and the prosecutor confirmed that these funds were embezzled from FTX customers. He said that SBF was attracted by a network of celebrity relationships connected to venture capital firms, and he believed that the company was a “one-stop shop” for expanding social networks.

Singh described how another FTX executive ultimately interpreted these endorsement deals as a strategy to promote user growth. However, Singh himself had reservations, considering these arrangements to be overly extravagant. Furthermore, after discovering a shortage of client funds, Singh had urged the former billionaire to terminate these transactions in September 2022:

Such practices are too crazy; we must cut them as much as possible.

However, SBF believed Singh was “short-sighted,” despite FTX facing an $8 billion funding shortage and going bankrupt less than a month later, FTX was unwilling to cut any sponsorship expenses.

Singh also told the jury that he had always been concerned about SBF’s excessive spending habits and extravagant investments, such as investing $500 million in the artificial intelligence startup Anthropic and supporting cryptocurrency mining operations in Kazakhstan.

In addition, he revealed that there had been disputes with SBF over real estate investments, particularly regarding whether to purchase luxury penthouses for ten FTX and Alameda employees. He said that SBF appreciated the apartment, but some people considered it luxurious and expensive. However, despite opposition from colleagues and friends, SBF ultimately purchased the penthouses.

Adderall, a psychiatric medication

Meanwhile, SBF’s lawyer claimed that their client had not received the prescribed Adderall medication during the trial. The defense argued that the lack of medication for attention deficit hyperactivity disorder could affect SBF’s attention and potentially deprive him of the right to self-defense.

The defense further advocated for a postponement of the trial until SBF receives appropriate medication treatment.

However, Judge Lewis Kaplan denied the defense’s request for a trial postponement and provision of medication treatment, citing a lack of medical evidence supporting this claim. Kaplan stated:

I cannot allow lawyers to provide medication to defendants solely on the basis of “need.”

SBF’s defense team expects to cross-examine Singh when the trial resumes on October 17th. The trial will continue to attract legal observers and cryptocurrency enthusiasts, uncovering new mysteries about the internal operations of FTX and its founder, Sam Bankman-Fried, every day.

Singh, 28 years old, has cooperated with the government and becomes the third key witness in SBF’s “circle of friends” in this trial.

There are two other key witnesses in the SBF core circle, former Chief Technology Officer Gary Wang from FTX and former Chief Executive Officer Caroline Ellison from Alameda Research, a hedge fund under FTX.

The prosecutor accuses SBF of embezzling billions of dollars from FTX customers, deceiving investors, and misleading lenders involved with the exchange and Alameda. SBF has consistently denied any wrongdoing, claiming that his actions were out of a sincere desire to guide the exchange through the crisis.

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