In simple terms, Singh's testimony indicated that Bankman-Fried used customer funds for political donations to Democrats. According to Singh, upon discovering the financial shortfall, he had a lengthy conversation with Bankman-Fried in September 2022. During this conversation, the FTX CEO informed him that he intended to raise additional capital and reduce expenses.
"There was a significant deficit," Singh testified. "Alameda sending me money to spend only exacerbated that deficit."
Furthermore, Singh disclosed that he frequently allowed Guarding Against Pandemics, a political action group led by Bankman-Fried's brother Gabriel, to use his name for donations originating from Alameda. A Yahoo Finance report disclosed the existence of a Signal group chat where the brothers or their political advisors often directed donations in Singh's name.
"I was a straw donor for campaign donations, knowing that the money for those donations came from customer funds," said the former FTX engineer.
According to Yahoo Finance, Singh's testimony – which followed his guilty plea for wire fraud and conspiracy to violate campaign finance laws in February – offered the jury insights into Bankman-Fried's spending habits.
Prosecutors also presented a spreadsheet from March that outlined $1.1 billion in FTX endorsement deals. These deals included naming rights to the Miami Heat's arena and partnerships with notable figures such as NFL quarterback Tom Brady, model Gisele Bundchen, basketball star Stephen Curry and comedian Larry David of "Curb Your Enthusiasm" fame.
At the time, Singh believed these deals were excessively flashy and suggested to Bankman-Fried that they should cut as many of them as possible.
According to a Bloomberg report, Singh provided detailed insights into his tumultuous relationship with his former boss and how this association made him contemplate suicide.
During his testimony, Singh revealed that he experienced "severe emotional distress" in the days leading up to the failure of FTX in November 2022. He grappled with allegations from FTX's former chief regulatory officer, Daniel Friedberg, who partially held him responsible for the company's downfall.
Singh disclosed that he only became aware of a massive $8 billion deficit in the company's balance sheet and the misappropriation of FTX customer funds in September 2022, approximately two months before the firm filed for bankruptcy. The former FTX engineer urged his boss to take responsibility for the company's dire financial predicament, stating that a "crazy blame game" was undermining productivity within the company.(Related: FTX used $200 million of customer deposits to fund venture deals.)
Bankman-Fried faces the prospect of decades in prison on charges related to the funneling of FTX customer funds into Alameda Research, an affiliated hedge fund, for risky trades, political donations and expensive real estate acquisitions, ultimately leading to the bankruptcy of both entities.
Despite the substantial financial deficit, Singh testified that Bankman-Fried continued to indulge in extravagant expenditures on endorsement deals and other expenses. Singh argued that such spending only exacerbated the deficit, describing it as "digging the customer deficit hole deeper." Singh also disclosed his role in writing the computer code for the "allow negative" feature, which allowed Alameda to carry out transactions even without sufficient funds in its account.
He pointed out that Bankman-Fried's approach to investments, real estate and celebrity endorsements was characterized by excess. Additionally, Singh revealed that he often learned of significant investments and purchases only after they had been executed. When he voiced concerns about the excessive spending, Bankman-Fried reacted defensively, accusing individuals like Singh of being the "real insidious problem" that sowed doubt within FTX.
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Watch Martin Brodel explaining how a "close associate" of Sam Bankman-Fried tipped off authorities in the Bahamas, leading to his arrest.
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