US closes in on Bankman-Fried inner circle with probe of FTX chief engineer

Washington – The United States authorities are ratcheting up pressure on Sam Bankman-Fried’s inner circle as they scrutinise former FTX head of engineering Nishad Singh, according to people familiar with the matter.

If US prosecutors find Mr Singh had a role in the

alleged multi-year scheme at

cryptocurrency exchange

FTX and trading firm Alameda Research

to defraud investors and clients, he could be charged as soon as before February, said one of the people.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are also probing Mr Singh, said the person, who asked not to be identified discussing the matter.

The scrutiny of Mr Singh, who until recently lived with Bankman-Fried in a Bahamas penthouse and was a high school friend of his younger brother, Gabriel, presents the latest legal threat to Bankman-Fried as he fights a slew of criminal charges. Former close associates Caroline Ellison and Gary Wang have pleaded guilty to fraud in connection to their roles at Alameda and FTX and are working with the authorities.

It is unclear whether Mr Singh, who has not been accused of wrongdoing, is cooperating with US officials or will do so. Mr Andrew Goldstein, a lawyer for Mr Singh, declined to comment, as did representatives for the US Attorney’s Office for the Southern District of New York as well as the SEC and CFTC. Mr Goldstein previously served as chief of the district’s public corruption unit, which is now part of a special FTX task force.

The ongoing, sprawling investigation into

November’s spectacular collapse of FTX

is one of the highest-profile corporate crime cases in US history. Prosecutors and regulators have alleged that Bankman-Fried orchestrated a years-long scam, which involved misleading investors and misusing billions of dollars of FTX customer funds to pay off debts and expenses of Alameda, the trading firm he also founded.

Bankman-Fried pleaded not guilty

on Tuesday to criminal charges. Before his downfall, the former FTX chief executive embraced his role as the face of a sprawling web of crypto businesses and rode it to stardom and riches. The 30-year-old was a billionaire and appeared on stages around the world flanked by politicians, celebrities and athletes, touting the exchange and digital assets.

Behind the scenes, Alameda’s former CEO Ellison, FTX co-founder Wang and Mr Singh formed the backbone of Bankman-Fried’s inner circle.

The exact scope of the probe into Mr Singh’s role and activities at FTX is not known. Bloomberg News in December reported on documentation showing that a GitHub account bearing Mr Singh’s name authored code that hid Alameda’s ballooning liabilities. GitHub is a repository that companies and individual software developers use to store and share code. The documentation reviewed by Bloomberg was in the form of comments associated with specific lines of code.

It was not immediately clear whether any other FTX employees had access to the account. Mr Singh has not responded to requests for comment on the code.

Plea agreements for Ellison and Wang released in December said prosecutors will recommend reduced sentences for the pair if they provide “substantial assistance” to the investigation.

Mr Singh, like Bankman-Fried, was a prolific donor to Democratic candidates. He had given more than US$9.3 million (S$12.5 million) since 2020, Federal Election Commission records showed.

Prosecutors have alleged that Bankman-Fried, who according to US bankruptcy filings received US$1 billion in loans from Alameda, used and laundered customer funds through political donations, charitable giving and other investments.

Mr Singh borrowed US$543 million from Alameda, according to bankruptcy documents. The authorities have not said that the money was used inappropriately. BLOOMBERG