SEC Charges Nishad Singh with Defrauding Investors in Crypto Asset Trading Platform FTX
summary
Nishad Singh, former Co-Lead Engineer of FTX, was charged by the SEC for his role in a multiyear scheme to defraud equity investors, diverting hundreds of millions of dollars in customer funds to Alameda Research, and has consented to a settlement.
paragraph
The SEC charged Nishad Singh for his role in a fraud scheme that diverted hundreds of millions of dollars in FTX customer funds to Alameda Research, a hedge fund owned by Sam Bankman-Fried and Gary Wang. Singh knowingly enabled the misappropriation of customer assets despite false public assurances that FTX safeguarded client funds. He personally withdrew approximately $6 million from FTX for luxury purchases and charitable donations as FTX neared collapse.
narrative
The Securities and Exchange Commission (SEC) charged Nishad Singh, former Co-Lead Engineer of FTX Trading Ltd., for his role in a multiyear scheme to defraud equity investors in FTX, a crypto trading platform. The alleged fraud involved diverting hundreds of millions of dollars in FTX customer funds to Alameda Research, a crypto hedge fund owned by Samuel Bankman-Fried and Gary Wang, despite false assurances that FTX was a safe platform. Singh knowingly enabled the misappropriation of customer assets despite false public assurances that FTX safeguarded client funds. He personally withdrew approximately $6 million from FTX for luxury purchases and charitable donations as FTX neared collapse. The SEC alleges Singh violated anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Singh has consented to a bifurcated settlement, subject to court approval, which includes a permanent injunction, a conduct-based injunction, and an officer and director bar, with the court to determine the amount of disgorgement and civil penalty. In parallel, the U.S. Attorney’s Office and CFTC also filed charges against him, and he is cooperating with ongoing investigations led by the SEC’s Crypto Assets and Cyber Unit.
Classified crypto-securities(confidence 97%). EDGAR detection: forms 1-A/S-1/8-K· recall 43% / precision 2%. detection rule →
Parties
gurbir s. grewalnishad singhsec’s complaintSecurities and Exchange Commissionu.s. attorney’s office for the southern district of new york and cftc
Keywords
singhftxsecsecuritiesinvestorscryptocrypto assettrading platformtradingnishad singhasset tradingcustomer fundsconduct-based injunctionofficer directorbankman-fried
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 1
- $6.00M $6 million $1M–$10M
Entities 5
- person gurbir s. grewal
- person nishad singh
- agency sec’s complaint
- agency Securities and Exchange Commission
- agency u.s. attorney’s office for the southern district of new york and cftc
Triples 7
- SEC charged Nishad Singh
- Singh created software code that allowed FTX customer funds to be diverted to Alameda Research
- Bankman-Fried directed hundreds of millions of dollars more in FTX customer funds to Alameda
- Singh withdrew approximately $6 million from FTX for personal use
- Gurbir S. Grewal said this was fraud, pure and simple
- SEC’s complaint charges Singh with violating anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934
- U.S. Attorney’s Office for the Southern District of New York and CFTC announced charges against Singh
PDF (from attached: complaint)
Text layers
Extracted body text (4,085c)
The Securities and Exchange Commission today charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd. (FTX), for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh along with Samuel Bankman-Fried and Gary Wang. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing. According to the SEC’s complaint, Singh created software code that allowed FTX customer funds to be diverted to Alameda Research, a crypto hedge fund owned by Bankman-Fried and Wang, despite false assurances by Bankman-Fried to investors that FTX was a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and that Alameda was just another customer with no special privileges. The complaint alleges that Singh knew or should have known that such statements were false and misleading. The complaint also alleges that Singh was an active participant in the scheme to deceive FTX’s investors. The complaint further alleges that, even as it became clear that Alameda and FTX could not make customers whole for the funds already unlawfully diverted, Bankman-Fried, with the knowledge of Singh, directed hundreds of millions of dollars more in FTX customer funds to Alameda, which were used for additional venture investments and loans to Bankman-Fried, Singh, and other FTX executives. Moreover, according to the complaint, as FTX neared collapse, Singh withdrew approximately $6 million from FTX for personal use and expenditures, including the purchase of a multi-million dollar house and donations to charitable causes. “We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. "A pillar of our securities laws is that when companies and their representatives decide to speak on an issue, they can’t lie to investors on matters that are core to their investment decisions. That’s true when it comes to crypto asset securities, just as it is in connection with any other securities.” The SEC’s complaint charges Singh with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC’s complaint seeks an injunction against future securities law violations; a conduct-based injunction that prohibits Singh from participating in the issuance, purchase, offer, or sale of any securities, except for his own personal accounts; disgorgement of his ill-gotten gains; a civil penalty; and an officer and director bar. Singh has consented to a bifurcated settlement, which is subject to court approval, under which he will be permanently enjoined from violating the federal securities laws, the above-described conduct-based injunction, and an officer and director bar. Upon motion of the SEC, the court will determine whether and what amount of disgorgement of ill-gotten gains plus prejudgment interest and/or a civil penalty is appropriate, as well as the length of the officer and director bar and the conduct-based injunction imposed against Singh. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC) today announced charges against Singh. Singh is cooperating with the SEC’s ongoing investigation, which is being conducted by Devlin N. Su, Ivan Snyder, and David S. Brown of the Crypto Assets and Cyber Unit and Brian Huchro, Pasha Salimi, and Ainsley Kerr. It is being supervised by Amy Flaherty Hartman, Michael Brennan, Jorge Tenreiro, and David Hirsch. The SEC’s litigation will be led by Amy Burkart and David D’Addio and supervised by Ladan Stewart and Olivia Choe. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the CFTC.
OCR text (4,085c · html-text · 99% conf)
The Securities and Exchange Commission today charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd. (FTX), for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh along with Samuel Bankman-Fried and Gary Wang. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing. According to the SEC’s complaint, Singh created software code that allowed FTX customer funds to be diverted to Alameda Research, a crypto hedge fund owned by Bankman-Fried and Wang, despite false assurances by Bankman-Fried to investors that FTX was a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and that Alameda was just another customer with no special privileges. The complaint alleges that Singh knew or should have known that such statements were false and misleading. The complaint also alleges that Singh was an active participant in the scheme to deceive FTX’s investors. The complaint further alleges that, even as it became clear that Alameda and FTX could not make customers whole for the funds already unlawfully diverted, Bankman-Fried, with the knowledge of Singh, directed hundreds of millions of dollars more in FTX customer funds to Alameda, which were used for additional venture investments and loans to Bankman-Fried, Singh, and other FTX executives. Moreover, according to the complaint, as FTX neared collapse, Singh withdrew approximately $6 million from FTX for personal use and expenditures, including the purchase of a multi-million dollar house and donations to charitable causes. “We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. "A pillar of our securities laws is that when companies and their representatives decide to speak on an issue, they can’t lie to investors on matters that are core to their investment decisions. That’s true when it comes to crypto asset securities, just as it is in connection with any other securities.” The SEC’s complaint charges Singh with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC’s complaint seeks an injunction against future securities law violations; a conduct-based injunction that prohibits Singh from participating in the issuance, purchase, offer, or sale of any securities, except for his own personal accounts; disgorgement of his ill-gotten gains; a civil penalty; and an officer and director bar. Singh has consented to a bifurcated settlement, which is subject to court approval, under which he will be permanently enjoined from violating the federal securities laws, the above-described conduct-based injunction, and an officer and director bar. Upon motion of the SEC, the court will determine whether and what amount of disgorgement of ill-gotten gains plus prejudgment interest and/or a civil penalty is appropriate, as well as the length of the officer and director bar and the conduct-based injunction imposed against Singh. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC) today announced charges against Singh. Singh is cooperating with the SEC’s ongoing investigation, which is being conducted by Devlin N. Su, Ivan Snyder, and David S. Brown of the Crypto Assets and Cyber Unit and Brian Huchro, Pasha Salimi, and Ainsley Kerr. It is being supervised by Amy Flaherty Hartman, Michael Brennan, Jorge Tenreiro, and David Hirsch. The SEC’s litigation will be led by Amy Burkart and David D’Addio and supervised by Ladan Stewart and Olivia Choe. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the CFTC.