Another FTX executive will reportedly plead guilty in the fraud case against the company’s founder.
Nishad Singh, the cryptocurrency exchange’s former engineering director and part of founder Sam Bankman-Fried’s inner circle, has been working out a deal with federal prosecutors, Bloomberg News reported Friday (Feb. 17).
The report, which cites sources familiar with the matter, said prosecutors had been preparing to file fraud charges against Singh.
Another source said Singh also faces lawsuits from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
Assuming Singh pleads guilty and cuts a deal with the U.S. Justice Department (DOJ), he would become at least the third high-profile FTX executive to cooperate with the investigation following a plea agreement.
Reports emerged last month that the DOJ was investigating Singh, who once lived at Bankman-Fried’s Bahamas penthouse and was part of his inner circle along with former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang.
Ellison and Wang pleaded guilty in December to charges against them for their roles in the collapse of FTX and its associated companies and are cooperating with authorities.
As PYMNTS has written, the pair will likely be key witnesses when Bankman-Fried goes on trial, “given their proximity to him, knowledge of the inner workings of FTX, admissions of guilt and their stated willingness to cooperate with the prosecution.”
If Singh joins them on the government’s witness list, it puts further pressure on Bankman-Fried, who was last week threatened with the revocation of his $250 million bail.
That’s what will happen if the one-time crypto wunderkind doesn’t agree to tougher restrictions placed on his use of electronic devices, apps and internet access, Judge Lewis Kaplan said in court Thursday (Feb. 16).
Federal prosecutors have previously shown evidence that Bankman-Fried used Signal, an encrypted messaging platform, to get in touch with the general counsel of FTX US, who is a prosecution witness.
Bankman-Fried’s attorney has said his client’s contact with the FTX lawyer was “merely an innocuous attempt to offer assistance in FTX’s bankruptcy process.”
Kaplan said that while the hearing wasn’t over bail revocation, “it could get there eventually.”
Bankman-Fried’s attorney called the judge’s proposal “draconian” during a court hearing, while arguing there is “no margin for error” for his client, who is “on trial for his life.”
Bankman-Fried is charged with multiple counts of fraud and conspiracy for his role in the downfall of FTX, which wiped out billions in investor and customer funds. If found guilty at trial this year, he could face decades in prison.