The SBF lawsuit has entered its third week, with FTX’s engineering manager Nishad Singh (who has reached a plea agreement) sitting in the witness stand this time. Nishad Singh emphasized in court that he had expressed opposition and dissatisfaction towards SBF’s illegal intentions multiple times during his tenure, but his efforts had no effect until the collapse of the FTX empire.
Nishad Singh expressed dissatisfaction with SBF
SBF insists on spending money to cooperate with Telegram
The famous “fiat@” account
FTX’s KYC backdoor
Nishad Singh testified that he had been displeased with SBF’s excessive spending behavior even before discovering an $8 billion financial hole in the company in September 2022. He described SBF and others living together in a penthouse apartment as “flaunting wealth,” adding that they could have chosen a more economical residence, but SBF personally preferred expensive properties with a nice view.
Nishad Singh testified that in his conversations with SBF, he learned that the funds causing the financial hole were used by Alameda for various risky investments, political donations, real estate purchases, and other expenses. SBF was unwilling to listen to opposing views from other team members and insisted on making large investments in order to have his business connect with celebrities, politicians, and other influential individuals.
In particular, Nishad Singh was particularly displeased with the relationship between SBF and Hillary Clinton’s former assistant Michael Kives, who helped SBF connect with political and business celebrities such as Katy Perry, Orlando Bloom, Jeff Bezos, and Kris and Kendall Jenner.
According to Nishad Singh, Michael Kives is also the founder of investment firm K5 Global, and at that time SBF planned to invest $200 million in K5 Global in exchange for relationships with political and business celebrities. However, Nishad Singh expressed concerns about this decision, believing it was harmful to FTX and told SBF that if he wanted to proceed, he should use his own money rather than the company’s. However, evidence submitted by the prosecutor showed that SBF ultimately invested hundreds of millions of dollars through Alameda in K5.
When funds were tight, SBF and SkyBridge Capital founder Anthony Scaramucci embarked on a trip to the Middle East to seek new investors. However, after this trip, SBF proposed to Nishad Singh that FTX create an integrated payment system for the messaging app Telegram, with FTX receiving TON tokens in return.
But Nishad Singh believed that holding a large amount of such difficult-to-cash tokens was not a good strategy. When he learned that FTX would have to pay up to $120 million for this collaboration, his concerns deepened. Although Nishad Singh and former Alameda CEO Caroline Ellison opposed the transaction, SBF proceeded regardless.
“fiat@” is an automated system used by FTX to track user deposits into FTX accounts, which are actually held by Alameda Research in a bank account under a subsidiary called North Dimension. Singh stated that he had been working at Alameda before FTX was established and knew from the “beginning of FTX” that Alameda’s bank account had been used to store customer funds for FTX to avoid difficulties in opening company accounts.
Nishad Singh stated that he personally programmed the system in 2019 to divert FTX user deposits to Alameda’s bank account. He also added wire transfer instructions on FTX’s website, indicating that funds would be deposited into an account controlled by Alameda (earlier testimony showed that FTX users were instructed to wire funds to a subsidiary of Alameda called “North Dimension”).
By 2021, Nishad Singh and other FTX executives were aware of an error in FTX’s internal accounting system that overestimated user deposits by about $8 billion. User deposits were recorded in the internal database of “fiat@”, but when users withdrew funds, FTX’s customer balances decreased and funds were sent from the actual bank account, but “fiat@” balances were not adjusted accordingly.
Additionally, Nishad Singh testified that he had built a system on FTX that gave Alameda real-time access to FTX user data, allowing Alameda to engage in transactions with users in “God mode.”
In subsequent testimony, the prosecutor also inquired about the process of FTX user registration. Nishad Singh stated that although FTX had a so-called KYC process, it actually only applied to most users. For those who wanted to make larger transactions but did not want to be tracked by FTX or any other government agency, they could choose not to go through the KYC process and simply pay a “small fee” to Alameda for privileges.