Week Three of SBF Trial: Former Engineering Director Testifies, Confirms FTX Used User Funds for Political Donations

The original title: "SBF Trial - Nishad Singh kicks off week 3 by confessing to stealing customer funds for straw political donations"

The original author: Assad Jafri, CryptoSlate

The original translation: bayemon.eth, ChainCatcher

With the appearance of former FTX engineering director Nishad Singh, the third week of SBF's trial has begun. It is reported that Singh is another important member of the exchange's leadership and the core circle of SBF.

Singh's testimony further confirms the explosive allegations of FTX's involvement in illegal political donations, including the fact of misappropriating user account funds without prior permission.

In Singh's testimony, he pointed out that Alameda would send him stolen client funds, which were then used for political donations from his account. In addition, he revealed that the stolen funds were used by SBF for investments and other expenses.

Related reading: "SBF trial enters second week, an article summarizing key witness testimony"

Embezzlement of funds, donation to politicians

Singh said in court that former FTX executive Ryan Salame was accused of manipulating his bank account to funnel funds to various political activities, and he admitted his role in the campaign funding plan. Salame then sought Singh's approval for these transactions through encrypted Signal chat.

Before the jury, Singh admitted frankly:

My responsibility is to click the button and approve transactions.

Aside from electronic trading, Singh also revealed that he had provided signed blank checks to a team led by Gabriel Bankman-Fried, SBF's brother, for the purpose of delivering political donations.

Singh testified that throughout the entire process, he was well aware that these funds came from FTX's client accounts, and for the sake of a "good political image," these political donations were made in his name to center-left politicians. Singh explained:

Even if the recipient of the funds knows that these donations come from other sources, linking my name to some donations is still very useful.

During the testimony, Singh appeared sincere and confident, occasionally using professional terminology to ask the judge questions. He recounted his first encounter with SBF during high school, and subsequently being employed by Alameda in 2017, briefly working at Facebook before being hired by FTX.

Prodigal spending, crazy investment

In Singh's testimony, the prosecutor presented an electronic spreadsheet dated March 2023, which showed that FTX had signed endorsement agreements worth $1.1 billion. These agreements include high-profile naming rights, such as the Miami Heat basketball arena.

These famous figures in the transactions include NFL quarterback Tom Brady, supermodel Gisele Bundchen, basketball star Steph Curry, and famous comedian Larry David. The prosecutor also showed the jury a photo of SBF with celebrities Katy Perry, Orlando Bloom, and venture capital firm K5 Global Michael Kives at the 2022 NFL Super Bowl game.

Singh revealed in court that SBF allocated $700 million to K5, and prosecutors confirmed that the funds were misappropriated from FTX clients. He said that SBF was attracted by the celebrity network associated with the venture capital firm and believed that the company was a "one-stop shop" for expanding social networks.

Singh recounted how another FTX executive explained these endorsement deals as a strategy to promote user growth. However, Singh himself has reservations about these arrangements, considering them too extravagant. Additionally, after discovering a shortage of customer funds, Singh urged the former billionaire to terminate these transactions in September 2022:

However, SBF believed that Singh was "short-sighted", even though FTX was facing a funding shortfall of $8 billion at the time and would go bankrupt in less than a month, FTX was unwilling to cut any sponsorship expenses.

Singh also told the jury that he has always been uneasy about SBF's excessive spending habits and lavish investments, such as investing $500 million in the artificial intelligence startup Anthropic and supporting cryptocurrency mining operations in Kazakhstan.

In addition, he also revealed that there had been a dispute with SBF over real estate investment, especially regarding the issue of whether to purchase luxury top-floor apartments for ten FTX and Alameda employees. He said that SBF appreciated this apartment, but some people thought it was too luxurious and expensive. However, despite opposition from colleagues and friends, SBF ultimately purchased the apartment.

Adderall Mental Health Medication

Meanwhile, SBF's lawyers claimed that their client did not receive the prescribed Adderall medication during the trial. The defense argued that the lack of medication for attention deficit hyperactivity disorder could affect SBF's focus and potentially deprive him of the right to self-defense.

The defense further argues for a postponement of the trial until SBF receives appropriate medical treatment.

However, Judge Lewis Kaplan rejected the defense's request for a delay in the trial and the provision of medical treatment, citing a lack of medical evidence to support this claim. Kaplan stated:

I cannot allow the lawyer to provide medication to the defendant solely on the basis of "need".

SBF's defense team is expected to cross-examine Singh on October 17th when the trial resumes. The trial will continue to attract legal observers and cryptocurrency enthusiasts, revealing new mysteries about the internal operations of FTX and its founder, Sam Bankman-Fried, every day.

28-year-old Singh, a practitioner in the encryption industry, cooperated with the government and became the third important witness in the SBF "circle of friends" trial.

Two other key witnesses in the SBF core circle are Gary Wang, former CTO of FTX, and Caroline Ellison, former CEO of Alameda Research, a hedge fund under FTX.

The prosecutor accused SBF of embezzling billions of dollars of funds from FTX customers, deceiving investors, and misleading lenders associated with the exchange and Alameda. SBF has consistently denied any wrongdoing, claiming that his actions were motivated by a sincere desire to guide the exchange through the crisis.

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