(Bloomberg) -- Former FTX chief engineer Nishad Singh avoided prison time over his role in the multibillion-dollar fraud at the cryptocurrency exchange.
Singh was sentenced by Judge Lewis A. Kaplan in federal court in New York Wednesday after the 29-year-old’s testimony helped secure a conviction of the ultimate architect of the fraud, FTX founder Sam Bankman-Fried. Bankman-Fried is serving a 25-year prison term after a jury found him guilty of fraud in late 2023.
Singh was one of three top executives who turned on Bankman-Fried after his once-thriving crypto empire imploded in 2022, exposing a gaping hole in customer deposits that had been used to pay for luxury real estate, political donations and risky investments. At one point, prosecutors said, the collapse cost customers and investors as much as $10 billion.
“I am overwhelmed with remorse for the harm I’ve participated in and caused so many innocent people,” Singh told Kaplan before he was sentenced. “The two months before and the two months after the FTX collapse were the hardest of my life.”
Singh hugged his lawyers once he learned he wouldn’t serve any jail time. His mother, seated in the row behind him, kissed his fiance on the cheek and comforted the many relatives and friends around them.
‘Personal’ Note
Addressing Singh’s parents on a “personal” note before he left the courtoom, Kaplan said: “I don’t see anything you did wrong.”
Singh’s sentence is by far the most lenient handed down to the former FTX executives who pleaded guilty to crimes in the wake of the crypto empire’s collapse. Alameda Research chief executive officer Caroline Ellison was sentenced to two years in prison in September. Former FTX Digital Markets chief Ryan Salame, who did not testify against Bankman-Fried, was sentenced to seven and a half years prison for his role in a campaign finance scheme.
FTX co-founder Gary Wang is due to be sentenced on Nov. 20, the last of the government’s key cooperating witnesses.
Singh’s attorneys sought to set him apart from Wang and Ellison, arguing he wasn’t part of the conspiracy at the heart of the case. Singh first learned in September 2022 — two months before FTX imploded — that sister hedge fund Alameda Research had been drawing down on billions of dollars in customer funds.
And Kaplan agreed Singh was not like Ellison.
Deserve More Credit
“Your case was not the case that Caroline Ellison’s was,” he said. “She knew for years what was going on. She got plenty of credit for cooperation but you deserve more.”
Singh has also agreed to forfeit his house in Washington state, shares in Anthropic PBC and other crypto assets.
In a deal struck with federal prosecutors in February 2023, Singh pleaded guilty to a six count indictment, including fraud and campaign finance law violations, in the hope of receiving a lighter punishment. He met with the government on more than 20 occasions, laying out details of crimes that federal prosecutors didn’t know about. That included implicating himself in a massive straw donor scheme involving millions of dollars of donations to political campaigns.
Singh didn’t know about the theft of customer funds until September 2022, his lawyer Andrew Goldstein said, pinning most of the blame on Bankman-Fried and Ellison.
“Those decisions were made by Sam Bankman-Fried with the necessary complicity and assistance of Caroline Ellison and they did it over a period of years,” he said.
But Singh, who has been working as a software engineer in California and volunteering at a homeless shelter since FTX’s collapse, said he spent a lot of time thinking about what he should have done differently.
“I alone bear responsibility for my actions and inactions,” said Singh, who contemplated suicide after the FTX collapse. “So many other good people have suffered as a result of what I have done.”
After learning about the fraud in September 2022, Singh forged ahead with the purchase of a $3.7 million home in the San Juan Islands and allowed political donations to be made in his name.
Kaplan said that while the fraud was a “very, very serious crime,” he was “entirely persuaded” by Singh’s testimony and by the arguments of the lawyers that “your involvement was much more limited than certainly Bankman-Fried and Ellison.”
(Adds more from hearing starting in sixth paragraph)
©2024 Bloomberg L.P.