Sam Bankman-Fried co-founded FTX in 2019 and is its CEO. Photo FTX
The Sam Bankman-Fried trial continues as federal prosecutors begin to hammer the nails into his coffin, as it were. In the latest from his trial, FTX’s former director of engineering Nishad Singh provided more damning testimony against the one time wunderkind.
Singh testified that Sam Bankman-Fried continued to make investments even after he clearly knew that his Alameda Research was using funds belonging to FTX clients without their knowledge. The central issue in the government’s case, and what brought down FTX, is the accusation that Bankman-Fried and his associates used their FTX customers’ accounts like their personal piggy banks. This all came out after the whole crypto market crashed and investors found out that their accounts had been raided.
The significance of Singh’s testimony, as with that of former FTX executive Caroline Ellison given last week, is that it shows that Sam Bankman-Fried was aware of the fraud.
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Singh also testified to how FTX squandered a great deal of money on promotions including $205 million for naming the home of the NBA’s Miami Heat’s arena the FTX arena (now the Kaseya Center), $150 million to Major League Baseball for sponsorships, $28.5 million to NBA star Stephen Curry, $50 million to former NFL quarterback Tom Brady and Giselle Bundchen, and $10 million to TV star Larry David. The deals came to a total of $1.13 billion.
In November 2022, FTX and Alameda Research filed for bankruptcy. It was later revealed that Alameda Research owed billions of dollars to FTX, and that FTX had lent Alameda money from customer funds.
Sam Bankman-Fried stands accused of seven counts of fraud, embezzlement of billions of dollars and conspiracy. If convicted on all counts, he could be sentenced to as much as 115 years in jail. The charges came after his FTX cryptocurrency exchange company went bust a few weeks ago. The big question over the fall of FTX is “what happened to all of the money that people left with the company?” FTX was a crypto bank, so to speak, a place where people could park their virtual assets. But unlike with banks, there is no regulation over the handling of cryptos and FTX is said to have moved people’s cryptos around, basically that the company spent their money.
Based in the Bahamas, FTX was a cryptocurrency exchange that said it was built by traders, for traders. FTX offers industry-first derivatives, options, volatility products and leveraged tokens. FTX had more than one million traders using its services when it failed.
