FTX exec pleads guilty to fraud charges

A top executive of the failed crypto-trading platform FTX is admitting to misconduct and co-operating with U.S. authorities.

The U.S. Department of Justice, along with the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC), filed charges against Nishad Singh, a former senior executive and director of engineering at FTX.

The charges are related to ongoing legal and regulatory action against FTX founder Sam Bankman-Fried, FTX, crypto hedge fund Alameda Research LLC, FTX co-founder Gary Wang, and Alameda co-CEO Caroline Ellison. The charges allege they were involved in a fraudulent scheme that caused more than US$8 billion in investor losses.

The authorities alleged Singh created the code that allowed FTX client assets to be diverted to Alameda, and that he withdrew US$6 million from FTX as the company was close to collapse.

“We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir Grewal, director of the SEC’s division of enforcement, in a release.

The CFTC said that Singh pleaded guilty to commodities fraud and other charges in a separate action against him brought by authorities in the Southern District of New York (SDNY).

In the derivatives regulator’s case against him, Singh also admitted liability on the two counts that it brought  — alleging fraud by misappropriation, and aiding and abetting fraud committed by Bankman-Fried, FTX and Alameda.

“In connection with that action, Singh agreed to forfeit certain assets received from FTX and Alameda,” the CFTC said.

The SEC reported that Singh has consented to a settlement, which is subject to court approval.

“Upon motion of the SEC, the court will determine whether and what amount of disgorgement of ill-gotten gains plus prejudgment interest and/or a civil penalty is appropriate, as well as the length of the officer and director bar and the conduct-based injunction imposed against Singh,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.