Singh-ing like a bird
The ongoing case against FTX, its founder, Sam Bankman-Fried (SBF), and some of its executives has taken another twist. Nishad Singh, the former head of engineering at the now-bankrupt crypto exchange, is reportedly close to agreeing on a plea deal with Manhattan prosecutors over his role in the FTX saga.
If Singh accepts the deal, he will become the third high-level executive to plead guilty to charges related to FTX’s collapse and provide evidence against SBF. Last year, two other FTX and Alameda Research executives, Gary Wang and Caroline Ellison, pleaded guilty to charges against them for their roles in FTX’s collapse. They are also working with prosecutors in the case against Bankman-Fried.
Singh, who attended a proffer session with prosecutors in January, could enter a plea deal with the court if he provides helpful information to the prosecution. Sources reveal that Singh is likely to admit to the charges brought against him. They also disclosed that the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) intend to sue Singh for his role in the FTX fiasco.
The Case is ongoing
The ongoing case against FTX, SBF, and his colleagues started in 2021, with the SEC and CFTC filing complaints against FTX, its affiliates, and its executives for allegedly conducting an unregistered securities offering and facilitating money laundering. In December 2021, Gary Wang and Caroline Ellison pleaded guilty to federal criminal charges related to FTX’s collapse.
Caroline and Gary
Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, a co-founder of FTX, have pleaded guilty to charges related to the collapse of FTX, a cryptocurrency exchange. The charges were brought by the US Department of Justice (DOJ), and the two also settled with the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). According to the SEC and CFTC, Ellison manipulated the price of FTX’s exchange token, FTT, at the direction of FTX founder Sam Bankman-Fried. The two are cooperating with investigators, and court records did not immediately provide more information on the charges.
FTX founder Sam Bankman-Fried was charged with eight crimes earlier this month, including money laundering, wire fraud, securities fraud, and campaign finance violations, after he was arrested in Nassau. He is being extradited to the US, and the charges against him include his alleged involvement in a scheme to conceal material information from FTX investors and artificially prop up the value of FTT.
The charges against Ellison and Wang relate to their involvement in the same scheme, with Ellison accused of committing fraud and making material misrepresentations tied to FTT sales, and Wang accused of allowing Alameda to maintain an essentially unlimited line of credit on FTX. The SEC and CFTC have also accused the two of hiding the real risks that FTX’s investors and customers faced by siphoning FTX’s customer funds onto the books of Alameda.
The exact details of the charges have not been revealed, but Ellison pleaded guilty to seven counts and faces up to 110 years in prison, while Wang pleaded guilty to four counts and faces up to 50 years in prison. They also reached a settlement with the SEC and CFTC.
FTX, founded in 2019, was one of the fastest-growing exchanges in the crypto industry, reportedly handling over $10 billion in daily trades by mid-2021. However, the exchange’s sudden collapse was attributed to SBF’s management style, the illegal activities of some of its executives, and SBF’s poor risk management decisions. The situation was made worse by the downturn in the cryptocurrency market, leading to the collapse of the exchange.
SBF, who is currently on $250 million bail and under house arrest in his parents’ home, awaits trial in October. Interestingly, he refused to plead guilty to the same charges. The ongoing case has shown the growing scrutiny from regulators and authorities over the cryptocurrency industry. Many believe that the case against FTX, its executives, and founder will set a precedent for future cases, highlighting the need for transparency, proper risk management, and adherence to regulations in the cryptocurrency industry.