Key takeaways:
- Ellison and Wang, two of Singh’s former coworkers, agreed to stay in their CFTC cases, and Singh has agreed to propose a consent order in the CFTC case.
- Ellison and Wang agreed to stay in the CFTC cases but resolved their cases with the SEC.
On February 28, the same day that Nishad Singh, a former head of engineering for FTX, pleaded guilty to three counts of criminal fraud in Manhattan district court, civil charges were made against him. He is under investigation by the Commodity Futures Trading Commission and the United States Securities and Exchange Commission.
Both agencies want to place restrictions and penalties on Singh after accusing him of mismanaging funds and deceiving FTX investors. Singh reportedly struck a plea deal with the prosecution in the U.S. District Court for the Southern District of New York and agreed to admit guilt to one count of wire fraud, one count of conspiring to conduct wire fraud against FTX customers, and one count of conspiring to commit commodities fraud.
The CFTC explicitly charged Singh in its two-count complaint with encouraging fraud and committing fraud by misappropriation. Additionally, the CFTC claimed that the current claims against FTX are connected to other charges against the company. In recent months, the regulator claimed that FTX misappropriated more than $8 billion in customer funds.
On the other hand, the SEC described Singh’s activities as “pure and simple fraud” and identified Singh as an “active participant” in the FTX investors’ deception. Singh, according to the securities regulator, broke two Securities Acts’ anti-fraud rules. In line with the SEC:
“Singh also knew or was reckless in not knowing that, more generally, Bankman-Fried often operated the companies [FTX and Alameda Research] without regard for responsible corporate controls and appropriate conduct.”
The SEC claims that Singh has agreed to a split settlement that places several restrictions on him and is subject to judicial approval. By the SEC:
“He will be permanently enjoined from violating the federal securities laws, the above-described conduct-based injunction, and an officer and director bar,”
Similar accusations were made on February 28 by the Southern District of New York (SDNY). Six conspiracy-related charges, including ones for fraud and contravening campaign finance laws, were filed against Singh by the SDNY. Singh admitted guilt to those allegations and consented to give up some of the assets he had gotten from FTX and Alameda.
Charges have also been brought by the SEC and CFTC against former Alameda Research CEO Caroline Ellison, former FTX Chief Technology Officer Gary Wang, and former FTX CEO Sam Bankman-Fried. Ellison and Wang agreed to stay in the CFTC cases but resolved their cases with the SEC. Cases brought by the SEC and CFTC against Bankman-Fried were suspended pending the outcome of his criminal prosecution.
