Former FTX Executive Reveals $8 Billion Hole in Accounts
In September of last year, Nishad Singh, a former executive at FTX, discovered an $8 billion discrepancy in the cryptocurrency exchange’s accounts. Despite this, he continued to approve transactions funded with customer deposits. Singh made these revelations while testifying in the trial of FTX founder Sam Bankman-Fried on charges of fraud and conspiracy.
FTX User Deposits Routed to Alameda
Singh explained that he played a role in directing FTX user deposits into Alameda bank accounts and added wire instructions to FTX’s website for this purpose. He also implemented a feature that gave Alameda “special privileges” to borrow and withdraw funds beyond their balance and collateral limits. These actions resulted in Alameda owing billions of dollars in user funds and created an $11 billion financial gap in FTX’s balance sheet.
FTX Founder’s Donations
Singh testified that Bankman-Fried made significant donations to political candidates and high-profile investments. These donations were made in Singh’s name, even though the recipients knew he was not the real donor. Bankman-Fried was linked to influential figures such as Hillary Clinton, Orlando Bloom, Kate Hudson, Kamala Harris’ husband, and Leonardo DiCaprio. Large sums were channeled into donations and endorsements for celebrities like Steph Curry, Kevin O’Leary, and Tom Brady.
One notable investment was a $200 million contribution to K5 Global, led by businessman Michael Kives. Singh expressed concerns about this investment and advised that it should be financed personally by Bankman-Fried rather than using FTX funds. However, the investment went through Alameda’s venture arm instead.
Singh also revealed that Bankman-Fried requested moving Serum (SRM) tokens onto Alameda’s balance sheet to deceive the U.S. Commodity Futures Trading Commission. Singh refused to complete the transaction due to ethical concerns.
Admiration Turns to Shame
Singh concluded his testimony by sharing how his initial admiration for Bankman-Fried as a “formidable” and “brilliant” leader turned into shame when he discovered the misuse of customer funds. Singh has pleaded guilty to charges related to fraud and campaign finance violations and is cooperating with the prosecution.
Hot Take: FTX Founder Faces Trial for Fraud and Conspiracy
Sam Bankman-Fried, the founder of FTX, is currently on trial facing charges of fraud and conspiracy. The testimony from former FTX executive Nishad Singh has shed light on alleged financial misconduct within the exchange, including an $8 billion hole in accounts and the routing of user deposits to Alameda bank accounts. Additionally, Bankman-Fried’s substantial donations to political candidates and high-profile investments have come under scrutiny. As the trial unfolds, it remains to be seen how these revelations will impact the future of FTX and its founder.
Insa’s extensive background in the financial realm encompasses roles as a writer, trader, and personal finance coach. Her proficiency spans a wide spectrum, ranging from commodities and indices to forex and cryptocurrencies. Insa’s specialization lies in furnishing strategic investment advice tailored to the fintech investment niche.