Law enforcement agencies stated that FTX management deliberately deceived customers about the status of the subsidiary platform Alameda Research, which subsequently faced a solvency crisis. FTX and Alameda colluded to combine client and corporate funds and used them for other purposes, including for personal needs.
Recall that the FTX crypto exchange collapsed in November 2021 after a sharp drop in the value of the FTT token. The company admitted that it was not possible to pay funds to its customers due to the depleted reserve assets.
Nishad Singh was aware of the facts of inefficient management of FTX target funds and abuse of the exchange management. At the same time, the former technical director constantly convinced clients that the company’s affairs were in perfect order. According to the CFTC, Singh transferred Alameda’s liabilities in the amount of $8 billion to the client’s account in order to prevent Alameda from paying interest on its outstanding balance. Singh was also convicted of implementing a series of fraudulent retroactive transfers, as well as providing false documentation for auditors.
Gurbir Grewal, director of the SEC’s legal Department, said that in Singh’s case, we are talking about multiple violations of the law related to the theft of funds from clients and investors.