Ex-FTX tech chief describes SBF’s ‘unilateral’ decisions

The former FTX chief technology officer Nishad Singh testified in court in the case against the founder of the collapsed exchange, Sam Bankman-Fried (SBF). The witness explained how his boss made questionable investment decisions unilaterally. This is according to the transcript of journalist Inner City Press.

One boss — two companies

According to Singh, although Caroline Ellison and Sam Trabucco nominally led Alameda Research, ‘in the end’ the firm was run by SBF. He ‘unilaterally spent the company’s funds’, despite his supposed separate role at FTX, and repeatedly threatened to fire Ellison, the former CTO says.

‘I learned about Alameda’s spending post-factum. I complained about the excess and flashiness, which, in my view, differed from the idea for which we built the company’, said the former FTX executive.

Singh spoke about the unapproved $500 million investment in AI startup Anthropic. According to testimony, Bankman-Fried also instructed him and Alameda’s former CTO Gary Wang to allocate $1 billion for venture firm K5 Global run by Michael Kives and Bryan Baum.

‘I asked that this be done with Sam’s money, not FTX funds’, explained the CTO.

SBF and Kives, who had been Hillary Clinton’s former aide, were on friendly terms, Singh explained. The entrepreneur introduced the FTX founder to a host of stars, including Katy Perry, Orlando Bloom, Jeff Bezos, Kris Jenner and Kendall Jenner.

The top executive found the idea of investing in the venture firm dubious, and he banned all FTX staff from dealing with K5; however SBF moved the money through Alameda.

Singh described the exchange head as a formidable figure and added that at one point he stopped trusting him.

Bankman-Fried continued to spend vast sums through to autumn 2022. On September 7 he invested $45 million in hedge fund SkyBridge Capital run by Anthony Scaramucci. Later SBF put $250 million into Modulo Capital, which allegedly belonged to his former girlfriend.

When the money ran dry

At some point, the search for extra liquidity led SBF to the idea of partnering with Telegram, Singh continued. After a trip to the Middle East with Scaramucci in search of new investors, Bankman-Fried told the head of the tech department that FTX planned to create a payment system inside the messenger.

For help in building the service, the founder of the collapsed exchange wanted a stake in TON tokens in exchange for a $120 million investment. However for Singh the ‘buying a large number of illiquid coins’ was not the best idea, given additional costs.

When in 2021 FTX’s revenue figures were slightly below the $1 billion Bankman-Fried expected, he came up with a plan to inflate the numbers on paper. SBF asked Singh to transfer tokens staking service Serum to Alameda addresses and backdate the transaction to create the impression of substantial collateral for the firm.

The former CTO said that the ultimate recipient of the financial data should have been the CFTC.

‘I realized that the aim of these manipulations was to mislead the U.S. regulator and the company’s staff. I wasn’t comfortable with that’, Singh said in indignation.

Subsequently, the ex-CTO refused to carry out the transfer, and later Serum announced the shutdown.

According to the tech chief, SBF also planned to acquire Celsius, Voyager and BlockFi to access a larger pool of borrowed funds.

A Serious Request

During a private conversation a few months before the collapse, Singh questioned SBF about Alameda’s $13 billion debt. The FTX head confirmed the tech chief’s suspicions and said that the company was ‘not meeting expectations’.

He also admonished Singh for his excessive worry and noted that concerns about shortage ‘reduce his productivity by about 5-10%’.

‘I was stunned and scared. I felt truly betrayed’, said the former CTO.

Nevertheless, Singh stayed at FTX until the end, though ‘every day’ he thought about quitting. The tech chief admitted that he ‘spent several days on the verge of suicide’ when the collapse occurred.

After the collapse, Singh urged SBF to take responsibility for what happened and explain to people that it was not ‘organized fraud’. But the pleas proved futile; Bankman-Fried did not plead guilty to any of the charges.

Earlier, the former head of Alameda Research disclosed to the court details of the meeting before the company’s collapse. At it she spoke of a backdoor on client funds and illiquid investments.

Later, the founder’s lawyers filed a motion to conduct cross-examination of the prosecution’s witnesses. In lawyers’ view, they are currently limited in ways to obtain information to build their defence.