Third Bankman-Fried associate Nishad Singh meets US prosecutors in FTX fraud case

New York - Former FTX engineering chief Nishad Singh has met United States prosecutors in a bid to become the third member of Sam Bankman-Fried’s inner circle to seek a cooperation deal in the fraud case over the

cryptocurrency exchange’s collapse.

Mr Singh, who has not been accused of wrongdoing, attended a so-called proffer session last week at the Southern District of New York US Attorney’s Office, according to people familiar with the matter. At such meetings, individuals are usually granted a limited immunity to share what they know with prosecutors.

A proffer session does not automatically lead to a cooperation agreement. Prosecutors must weigh the value of Mr Singh’s information before deciding whether to offer him a deal that could see him plead guilty and cooperate in exchange for possible leniency.

A Singh cooperation deal would leave Bankman-Fried, who

pleaded not guilty to eight criminal counts last week,

increasingly isolated. Caroline Ellison, who was the chief executive of FTX’s hedge fund arm Alameda Research, and Gary Wang, FTX’s co-founder, have pleaded guilty to fraud charges and are working with the authorities.

Prosecutors have accused Bankman-Fried of laundering customer funds through political and charitable donations as part of a years-long fraud of “epic proportions” at FTX. The indictment against Bankman-Fried also alleges campaign finance violations.

Campaign finance

Mr Singh, a Democrat mega donor who lived with Bankman-Fried in the Bahamas, could offer an insight into the campaign finance side of FTX. He has given more than US$9.3 million (S$12.4 million) to Democratic candidates and committees since 2020. In the last election cycle, he shelled out US$8 million alone. Among the largest recipients was Mind The Gap, a political action committee founded by Bankman-Fried’s mother that received US$1 million from Mr Singh in April 2021.

Mr Singh also received hundreds of millions of dollars in loans from Alameda Research, according to bankruptcy court filings.

The US Securities and Exchange Commission and the Commodity Futures Trading Commission are also probing Mr Singh, Bloomberg previously reported.

Bankman-Fried frequently met regulators and visited the White House during his long-running public relations blitz championing the crypto cause.

At least US$73 million in political donations were tied to FTX and Bankman-Fried himself pledged to give as much as US$1 billion in the 2024 presidential election cycle.

The new management at FTX wants to claw back those donations.

The team publicly appealed in December to the “recipients of contributions” to return the money voluntarily. The alternative will involve using the bankruptcy court to force organisers to repay the donations – with interest.

Stern warning

After announcing the pleas of Ellison and Wang, US Attorney Damian Williams issued a stern warning to those whom prosecutors had not heard from yet.

“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” he said on Dec 21. “We are moving quickly, and our patience is not eternal.”

The government expects potential witnesses to detail their own conduct as well as everyone else’s. Former Manhattan federal prosecutors said the attorney’s office typically requires cooperating witnesses to plead guilty to all of their misconduct.

“You want to make sure the jury understands you are not trying to give the witness a free pass,” said former Manhattan prosecutor Sarah Paul. “Giving (people) a cooperation agreement is a great benefit, but they have to own up to everything they did.” BLOOMBERG