‘FTX’s extravagant spending made Sam Bankman-Fried’s lieutenant Nishad Singh feel ashamed’

FTX engineering chief Nishad Singh testified in Manhattan federal court about his disagreements with Sam Bankman-Fried, the founder of FTX and Alameda, over financial matters. Singh revealed Bankman-Fried’s profligate spending habits and his disregard for Singh’s opinions.

Prior to his arrest on fraud and money laundering charges, Bankman-Fried was known for his unconventional appearance and laid-back attitude. However, behind the scenes, he indulged in luxurious purchases and “social climbing,” according to Singh’s testimony.

Singh frequently questioned Bankman-Fried’s spending sprees and investment decisions but was consistently ignored. He recalled instances where Bankman-Fried humiliated him in front of other FTX employees and told him to stop sharing his views.

Notably, Singh was unaware that Bankman-Fried was using funds from FTX customers for extravagant purchases until September 2022.

Bankman-Fried is facing seven criminal charges related to wire fraud, securities fraud, and money laundering. While he has pleaded not guilty, several former FTX and Alameda executives, including Singh, have pleaded guilty and are cooperating with prosecutors.

Singh testified that he initially met Bankman-Fried through his friendship with Gabe Bankman-Fried, Sam’s younger brother. He joined Alameda as a software engineer before moving to FTX in 2019. As he rose through the ranks, he was compensated with equity instead of bonuses, making him a billionaire on paper.

Singh described his relationship with Bankman-Fried as complex, initially filled with respect but eventually eroded distrust.

One of the major points of contention between the two was money. Singh discovered an $8 billion shortfall in FTX finances in September 2022, which had been spent on real estate, venture capital, speculative bets, and campaign donations.

Bankman-Fried directed spending of over $1 billion on various ventures, including crypto mining company Genesis, venture capital firm Sequoia Capital, AI company Anthropic, and NFT company Yuga Labs. Additionally, FTX funds were used for sponsorship deals totaling $1.3 billion, including partnerships with the Miami Heat, Major League Baseball, League of Legends, and the Tomorrowland music festival. Endorsement deals with celebrities like Tom Brady, Gisele Bündchen, and Larry David were also funded FTX.

Singh disagreed with Bankman-Fried’s spending on celebrity partnerships and investments in K5 Global, which he found “value extractive” and detrimental to FTX’s culture. Despite raising his concerns, Singh was overruled, and the investments proceeded using FTX customer money.

Another source of disagreement was the purchase of a $35 million penthouse in Albany. Singh protested the purchase as excessive and ostentatious, but Bankman-Fried prevailed.

The ongoing trial sheds light on the contentious relationship between Bankman-Fried and Singh and the extravagant spending habits of the FTX founder.

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