FTX’s former head of engineering, Nishad Singh, must disgorge $3.7 million, according to a supplemental consent order levied against him this week by the Commodity Futures Trading Commission.
The penalty is equal to the value of real estate he purchased in 2022 with funds from his personal FTX account. “He knew or recklessly disregarded” that they consisted, at least partially, of misappropriated FTX customer assets, according to the order.
Additionally, he is banned from trading for five years and registering with the CFTC in any capacity for eight years from April 13, 2023 – the date on which he entered into an earlier consent order with the commission.
The initial consent order found Singh liable for fraud by misappropriation and aiding and abetting fraud. Together, the consent orders resolve the CFTC’s Feb. 28, 2023, enforcement action against Singh.
The agency seeks no restitution or civil monetary penalty from Singh, “based in part upon Singh’s cooperation in the Commission’s investigation and related proceedings.”
“The injunctions and monetary relief imposed here demonstrate the significant benefits that may be achieved through cooperating with the CFTC,” the agency’s director of enforcement, David Miller, said in a prepared statement.
“The defendant engaged in, and aided, significant violations of … CFTC regulations as the former FTX head of engineering, and the consent orders reflect the severity of these violations,” Miller said. “But this resolution also reflects the Commission’s commitment to rewarding and incentivizing material assistance in Division investigations.”
Singh pleaded guilty to six counts, including conspiracy to commit commodities fraud, for his role in FTX’s downfall, in which the cryptocurrency exchange commingled and misappropriated customer funds after claiming to be “the safest and easiest way to buy and sell crypto.” Roughly 2 million creditors were affected in the exchange’s bankruptcy fallout.
Singh avoided prison time and was instead sentenced to three years of supervised release. His former colleagues – former FTX CEO Sam Bankman-Fried, former Alameda Research CEO Caroline Ellison and former FTX Digital Markets CEO Ryan Salame – each received prison sentences. Former FTX Chief Technology Officer Gary Wang, however, also avoided prison time.
“We are pleased that the CFTC recognized our client's limited role in the underlying conduct and his extensive cooperation,” Singh’s attorneys, Andrew Goldstein and Russell Capone of the law firm Cooley, said in an emailed statement. “Mr. Singh is grateful to have this matter behind him.”
Singh, who had been a close friend of Bankman-Fried’s family since attending high school with his younger brother Gabe, said during the trial that he “felt really betrayed” when Sam Bankman-Fried told him the company didn’t have enough assets to cover the shortfall.
Singh recounted the exchange, in which he said to Bankman-Fried, “Jesus f------ Christ.”
Bankman-Fried, at the time, allegedly responded, “This has cost 5% to 10% of my productivity … for the last year,” according to Business Insider.
