FTX Exec Learned of “Hole” in Finances 2 Months Before Collapse

Nishad Singh, a former senior FTX executive, has testified that he found out the exchange was misusing customer funds two months before it went bankrupt, CoinDesk reported.

$8B was missing

The former head of engineering "learned of a hole" in company finances in September last year. He noticed that $8 billion was missing from the company. Despite that, he approved transfers that he knew were probably sourced from customer funds.

Questionable expenses

Singh also learned that Alameda Research, FTX’s research arm, spent money on real estate purchases and venture investments. SBF himself planned to make record-breaking political donations for the presidential elections in 2024.

Singh testified that Sam Bankman-Fried would make big investments in relationships with celebrities and politicians against other team members’ will.

$200M investment in K5 Global

Singh was questioned about a $200 million investment Alameda made in K5 Global, a venture capital company managed by businessman Michael Kives. According to Singh, Bankman-Fried attended a Super Bowl party hosted by Kives, which was also attended by Hillary Clinton, Kendall Jenner, and Jeff Bezos among others. SBF was so impressed by the star power that he decided to make the investment into Kives' business, hoping his exchange would earn "connections."

Singh allegedly protested against the investment, advising the former CEO that the money should come from his own pocket and not FTX. According to a spreadsheet entered by prosecutors as evidence, the investment went through Alameda’s venture capital branch.

Key witnesses

Singh is among the key witnesses against FTX’s founder, who faces a number of fraud and conspiracy charges. He has pled guilty to the charges against him like fellow ex-executives Gary Wang and Caroline Ellison.

A lost, but not forgotten friendship

Singh recalled feeling intimidated by his high school friend SBF at the beginning of his tenure at the exchange. However, the admiration toward the "brilliant wunderkind” at the helm of the platform morphed into resentment after he found out about the huge hole in the finances in September 2022.