The Securities and Exchange Commission (SEC) has taken action against Nishad Singh, the former co-lead engineer of FTX, for his involvement in a multiyear scheme to defraud equity investors.
Singh, who co-founded the FTX crypto trading platform with Samuel Bankman-Fried and Gary Wang, has been charged with securities fraud. The SEC’s ongoing investigation includes probing into other potential securities law violations and individuals and entities related to the alleged.
The SEC filed a complaint stating that Nishad Singh developed software code enabling the transfer of FTX customer funds to Alameda Research, a crypto hedge fund owned by Samuel Bankman-Fried and Gary Wang. The alleged scheme occurred despite Bankman-Fried’s misleading assurances to investors that FTX was a secure trading platform with advanced risk management measures to protect customer assets and that Alameda was just like any other customer without special privileges.
The complaint further alleges that Singh was or should have been aware that these statements were false and deceptive.
According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, the allegations against FTX are that while promoting their effective risk mitigation measures to investors, the company’s co-founder, Mr. Singh, and his accomplices were using software code created by Singh to steal customer funds. In simpler terms, the SEC is accusing FTX of fraudulently deceiving investors while simultaneously engaging in illicit activities.
In a parallel action, Singh also faces charges from the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC). However, Singh is cooperating with the ongoing investigation by the SEC. The SEC’s litigation will be led by Amy Burkart and David D’Addio and supervised by Ladan Stewart and Olivia Choe.