SBF Trial Week 3: Former FTX Engineering Director Nishad Singh Testifies, Admits to Misappropriating User Funds for Political Donations

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

Author: Assad Jafri, CryptoSlate

Compiled by: bayemon.eth, ChainCatcher

With the appearance of former FTX engineering director Nishad Singh, the third week of SBF's trial has commenced. Singh is reportedly another key member of the exchange's leadership and SBF's inner circle.

Singh's testimony further corroborated the explosive allegations of FTX's involvement in illegal political donations, including the fact that user account funds were misappropriated without prior consent.

Singh's testimony indicated that Alameda would send him the stolen customer funds, which he then used for political donations from his account. Additionally, he revealed that the stolen funds were used by SBF for investments and other expenditures.

Related Reading: 《SBF Trial enters week two, key witness testimonies summarized》

Misappropriating Funds to Donate to Politicians

Singh stated in court that former FTX executive Ryan Salame was suspected of manipulating his bank accounts to funnel money into various political activities, and he admitted his role in the campaign finance scheme. Salame subsequently sought Singh's approval for these transactions through encrypted Signal chats.

In front of the jury, Singh candidly admitted:

My job was to click the button and approve the transactions.

In addition to electronic transactions, Singh revealed that he had provided signed blank checks to a team led by SBF's brother Gabriel Bankman-Fried, who used these checks to deliver political donations.

Singh's testimony pointed out that throughout the process, he was fully aware that these funds came from FTX's customer accounts, and for the sake of a "good political image," these political donations were made in his name to center-left politicians. Singh explained:

Even if the recipients of the funds knew that these donations came from elsewhere, associating my name with some donations was still very useful.

During his testimony, Singh appeared sincere and confident, occasionally asking the judge questions using technical jargon. He recounted his initial acquaintance with SBF in high school, followed by his employment at Alameda in 2017, a brief stint at Facebook, and then employment at FTX.

Lavish Spending and Crazy Investments

In Singh's testimony, prosecutors presented a spreadsheet dated March 2023, which showed that FTX had signed endorsement deals worth $1.1 billion. These agreements included high-profile naming rights, such as for the Miami Heat's basketball arena.

Notable figures involved in these deals included NFL quarterback Tom Brady, supermodel Gisele Bundchen, basketball star Steph Curry, and famous comedian Larry David. Prosecutors also showed the jury a photo of SBF with celebrities Katy Perry, Orlando Bloom, and venture capitalist Michael Kives at the 2022 NFL Super Bowl.

Singh revealed in court that SBF allocated $700 million to K5, which prosecutors confirmed was misappropriated from FTX customers. He stated that SBF was attracted to the celebrity network associated with the venture capital firm, believing it to be a "one-stop shop" for expanding social connections.

Singh recounted how another FTX executive ultimately explained these endorsement deals as a strategy to promote user growth. However, Singh himself was skeptical, believing these arrangements were excessively extravagant. Furthermore, after discovering a shortfall in customer funds, Singh urged the former billionaire to terminate these deals in September 2022:

This approach is too crazy; we need to cut them as much as possible.

However, SBF considered Singh "short-sighted," and despite FTX facing an $8 billion shortfall and being on the brink of bankruptcy in less than a month, FTX was unwilling to cut any sponsorship expenditures.

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

Additionally, he revealed that there had been disputes with SBF regarding real estate investments, particularly about whether to purchase luxury penthouses for ten FTX and Alameda employees. He said that SBF was fond of the penthouse, but some believed it was excessively expensive. However, despite objections from colleagues and friends, SBF ultimately purchased the penthouse.

Adderall Mental Health Medication

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

The defense further argued for a delay in the trial until SBF received appropriate medical treatment.

However, Judge Lewis Kaplan denied the defense's request to postpone the trial and provide medication, citing a lack of medical evidence to support the claim. Kaplan stated:

I cannot allow the lawyers to provide medication to the defendant solely based on "need."

SBF's defense team is expected to cross-examine Singh when the trial resumes on October 17. The trial continues to attract legal observers and cryptocurrency enthusiasts, unveiling new mysteries about the inner workings of FTX and its founder Sam Bankman-Fried each day.

28-year-old Singh is cooperating with the government, becoming the third significant member of SBF's "circle" to testify in this trial.

The other two key witnesses from SBF's inner circle are former FTX Chief Technology Officer Gary Wang and former CEO of Alameda Research, the hedge fund under FTX, Caroline Ellison.

Prosecutors accuse SBF of misappropriating billions of dollars from FTX customers, defrauding investors, and misleading lenders associated with the exchange and Alameda. SBF has consistently denied any wrongdoing, claiming his actions were motivated by a sincere desire to guide the exchange through a crisis.