Sam Bankman-Fried’s multibillion-dollar criminal financial fraud trial is nearing its halfway point.
And Nishad Singh, the former engineering director at the since-imploded FTX cryptocurrency exchange, wilted somewhat under cross-examination on Tuesday (Oct. 17), the second and final day of his witness testimony in the trial of his childhood friend and one-time boss.
Singh spent much of Monday’s (Oct. 16) testimony portraying Bankman-Fried as a lavish and excessive spender and himself as the voice of reason, and the defense worked Tuesday to undermine as much of those claims as it could.
Singh told the jury that September 2022 was the first time that he realized Alameda had misappropriated and spent billions of dollars of FTX’s customer deposits. But under questioning from Cohen, the former FTX deputy revealed he had borrowed millions of dollars from the company in October 2022 in order to buy a luxury home in Washington state’s Orcas Island — despite being aware that FTX was misusing customer deposits at the time, and had an $8 billion hole in its balance sheet.
“My spending on it was egregious, unnecessary and selfish,” Singh told the jury. “I was embarrassed and ashamed.”
Singh closed on the home in November 2022, the same month that FTX self-destructed. He later forfeited the home.
“You said it was to donate to charity?” Cohen asked Singh about a portion of the $477 million he borrowed from FTX.
“Yes,” Singh replied.
“Did you ever do that?” asked Cohen.
“No,” said Singh.
Singh’s cross-examination marked the 10th day of Bankman-Fried’s criminal trial. It comes after a late-night filing Sunday (Oct. 15) where Bankman-Fried’s legal team pleaded for access to his long-release Adderall and requested that Tuesday’s hearing be adjourned temporarily unless their client received his medication.
Judge Lewis Kaplan, the federal judge presiding over the trial, rejected the motion.
“I can’t have lawyers coming in and giving drugs to people on trial because somebody says they need it,” Kaplan said.
Regarding the $35 million Bahamas penthouse that Bankman-Fried, Singh, and other FTX leaders all resided in — an apartment that Singh spent Monday decrying as wasteful — the defense homed in on the fact that Singh and his girlfriend lived in the master suite.
When Singh protested that he “considered moving out many times,” Cohen replied, “But you didn’t.”
The former FTX engineering director also told the court while under cross-examination that Alameda’s unlimited line of credit was initially designed to help customers.
He detailed an “undesirable” occurrence in mid-2020 when random FTX customers were forced to take on risky positions because the exchange had no eligible backstop liquidity providers who could step in, explaining that Alameda’s special privileges we’re meant to prevent a similar event from happening again.
In her testimony last Tuesday (Oct. 10), former Alameda CEO Ellison testified that the firm only needed “around $100 million to $200 million” to perform its market making and liquidity duties.
Singh testified that he first became aware of FTX and Alameda’s huge financial troubles in September 2022, and that he had a “surprising amount of haziness when trying to recall events in June and July 2022.”
The summer of 2022 was a decidedly challenging one for the crypto sector, with the knock-on failures of TerraUSD and Luna and Three Arrows Capital, which substantially impacted FTX.
“There was a lot I don’t remember,” Singh told the court, repeatedly claiming ignorance to certain of the defense’s questions.
Singh is one of the government’s three star insider witnesses in the Bankman-Fried case. His colleagues, Gary Wang and Ellison, testified last week that Bankman-Fried directed them to commit crimes, and that those crimes led to FTX’s failure.
All of the former crypto executives have pleaded guilty to crimes similar to those Bankman-Fried is being accused of and are cooperating with the prosecution.