The Journal. - The Trial of Crypto’s Golden Boy: Nishad Singh Speaks Up

Episode Date: October 17, 2023

Nishad Singh— another critical member of Sam Bankman-Fried’s inner circle— testified Monday saying FTX customer money was used to fund political donations and that he pushed back on Bankman-Fried’s spending on celebrities. Rachel Humphreys and Caitlin Ostroff unpack his testimony and discuss a medical issue Bankman-Fried raised to the judge. Further Reading: - What’s Happening Today at the Sam Bankman-Fried Trial  Further Listening: - The Trial of Crypto’s Golden Boy  Learn more about your ad choices. Visit megaphone.fm/adchoices

1, 2, 1, 2, 1, 2. Okay, Caitlin, you start today. It was a much more eventful day than we thought it would be. It was. A lot of people showed up a little bit later to court than usual, at least among the press, thinking that not much would happen. And we were proven very wrong very quickly. We did think it would be a slow Monday, start of week three,

but we were proven wrong because today we got the final member of Mike Winfried's so-called inner circle, Nishad Singh. Yeah, so Nishad Singh was a member of the inner circle along with Caroline Ellison and Gary Wong. And Wong testified about the code that gave Alameda privileges.

Ellison set up that some of the Alameda money and FTX customer funds went to spending, investing on other companies. And Singh kind of filled in some of the other gaps of where else that money was spent. Yes, and we should say, Nishad Singh has pleaded guilty to six criminal counts, including wire fraud.

And the things that he said today on the witness stand were pretty explosive. There were a few times you sort of exclaimed mainly because he painted a picture of himself as someone who stood up to bankman freed unlike others in the inner circle but before we get to that another story that's sort of like buzzing along in the background of this trial at the moment is around bankman freed's access to medication. It's been kind of one of the longstanding issues. And Judge Kaplan weighed in on that today, and we'll get into that a little bit more.

It's a very fiery reaction. Yes. From the Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff. And I'm Rachel Humphries. Coming up, Nishad Singh testifies. We'll see you have it. The perfect summer mix. Bacardi. Do what moves you. Live passionately.

Drink responsibly. Copyright 2024. Bacardi, its trade dress and the bat device are trademarks of Bacardi and Company Limited. Rum 40% alcohol by volume. Before we get into today, Caitlin, we should just close the circle on one thing which is we've actually now secured not one but two free coffees yes through the court cafeteria it's it's buy four get one free which tells you how much caffeine we've consumed yeah we'll leave people to do the maths at home but let's get into what happened in the courtroom today. And the witness on the stand was Nishad Singh. Remind us, who is he?

Yeah, so Singh was raised in California by parents who immigrated to the US from India. And he is a very determined person. He grew up with asthma. And despite that, he set a world record when he was 16 for the fastest ultraramarathon among 16-year-olds at the time. And he gave actually a TED Talk about overcoming asthma to do that run. There are times when we are all pressed and we are all tried. And a genuine passion for what we are doing helps us push past those moments of hardship. So how do you make an idea happen? By loving the path it requires you to travel. Singh and Bankman-Fried go way back.

They went to the same elite high school in Silicon Valley, and Singh was good friends with Bankman-Fried's younger brother, Gabe. Singh went to Berkeley and he got a job at Facebook. But after a few months, he left to join Alameda Research, the trading firm that Bankman Freed founded. And Singh said it seemed like a huge opportunity. He talked about that on the FTX podcast. It was pretty clear that everybody working there was highly motivated, was sort of effective altruism aligned, which mattered a lot to me, and was really bright, really on it, and that I could learn a lot from them.

Bankman Freed star FTX. And there he was the director of engineering. And he spoke in court today about how he saw Bankman Freed, what he thought of him. And he described always being intimidated by him and that Bankman Freed was this formidable character. But he said that he was someone that he came to distrust, which I thought was interesting. Yeah, Singh said that, as time went on, he got more worried about the amount of money that FTX was interesting. Yeah, Singh said that, you know, as time went on, he got more worried about the amount of money that FTX was spending, and particularly about the amount of money that Bankman Freed was spending. He actually began to complain about that in 2022. Singh said that he would complain about what he saw as excess and flashiness, and that those kind of were opposite of what he thought FTX was founded for, which was to, you know, make money and give it back for the betterment of others and the world.

Yeah, I think one thing that came through repeatedly today through Singh's testimony was that he was someone who really believed in the stated values of FTX. And Singh talked about several big investments that the company made. One was into an AI company. There were investments into real estate. Also, a billion dollars was invested into a Bitcoin mining company in Kazakhstan. But the thing that really captured everyone's attention in the courtroom today was all the money going to celebrities for FTX's marketing budget. Yeah, and we looked at many more spreadsheets, but one spreadsheet in particular showed some of the investments that they had made in all of these sponsorships and partnerships, one of which was the FTX arena, the arena that the Miami Heat plays in. And so that was, you know,

more than $100 million, money to Steph Curry, to Tom Frady, Gisele Bundchen, Larry David. Yeah, and there was a lot of interest, I felt, on the reporter ventures at one point when we saw in evidence this Google Doc that Bankman-Fried had shared with Nishat Singh, where he had detailed a list of celebrities that he said he had had dinner with at this Super Bowl party in 2022. And Backman-Fried seemed very excited about all the connections that he could make. And he'd written a numbered list of the celebrities. And that list included Hillary Clinton, Orlando Bloom, Kate Hudson, and Leonardo DiCaprio. Right. And they asked Singh to kind of go down the list and say for the jury who everyone

was. And some of them were fairly big names and somewhat self-explanatory. But he gets to Kendall and Kris Jenner and he says, quote, I honestly could not tell you what they do. And everyone kind of started laughing. Yeah. But how many people in the courtroom do you think know who Kendall and Kris Jenner are? I mean, how would you define them? I thought they were influencers, but that's probably not a correct definition. I would say the correct terminology for the record is that they are part of a family known as the Kardashians.

But that's not important to this trial. In general, these weren't the only concerns Singh said he had. He also had to face much bigger problems at the core of FTX, and we'll talk about that after the break. with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique, so your business insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business. Contact a licensed TD Insurance advisor to learn more.

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but actually very important but it is one of like the big organizations that regulate u.s financial markets and so like that actually is a big deal. But Singh said that in that instance, he actually refused to alter those documents. But there was an instance where Singh testified that he did agree to doctor some documents. Right. And that was at the end of 2021. Singh said that Bankman Freed asked him to make a couple of changes, change the dates on some information that made it look like FTX had a bit more revenue than it actually did. Singh said that they were kind of on the cusp of having a billion dollars in revenue for 2021. And, you know, Bankman-Fried asked him to change some information to kind of just barely put them over that line. And Singh said that that information was later presented to auditors and investors. I should say that there

was, when this was presented in court, I heard you just go, oh my God, next to me. I thought that was fairly big. It was big. And before this trial started, one thing we understood about Singh was that he was a major democratic donor. And today he testified that actually he says he was the face of a group of people who directed these political donations. Singh said that some of the money was his and some belonged to FTX customers. And those donations went to various left of center causes. We should say Singh has pleaded guilty to conspiracy to violate campaign finance laws. And Bang Manfrey was initially charged with the same and he pleaded not guilty. Right. And those are no longer part of the charges against him at this moment.

But Singh testified that he was becoming increasingly unhappy with how his name was being used for these donations. And it felt like the prosecution was kind of trying to show the ethos of the companies that Bankman Freed founded, that he was kind of this leader who expected high loyalty and financial commitment from the people who were very close to him. and financial commitment from the people who were very close to him. Nishad Singh also testified that he found out later than other members of the inner circle about the huge amount of money Alameda owed to FTX.

He described today finding that out in September 2022, and he says he decided to confront Bankman Freed on the balcony of their penthouse in the Bahamas where they lived with others. Actually, the government pulled up a photo of the balcony. It has a huge, massive swimming pool in the middle of it. There's, like, these falling chairs out to either side. Singh said that he felt betrayed.

He thought that FTX was this force for good, that it would use the money it made to improve the world. And at this meeting, Singh said that he asked Bankman-Fried how much money Alameda owed to FTX, how much was this so-called hole. Singh said that Bankman-Fried responded that Singh was asking the wrong question, that he should be asking, you know, how much money could they pull together within 24 hours?

And Bankman-Fried said that, you know, that was $5 billion. And that sounds like a lot, but Alameda actually owed FTX $13 billion at the time. And Singh said that his response to this was, quote, Jesus effing Christ. That anxiety that Nishad Singh described on the witness stand today, he said it only amplified over the next few months. And when the collapse of FTX eventually happened in November 2022, he actually described being suicidal for some days. And we've previously reported that Singh was a wreck in the days after FTX collapsed. People close to him said that he was really upset, distraught, unshaven, kind of gaunt. And he just kind of disappeared with his girlfriend, who was also a senior FTX employee.

And he was just unreachable. Singh's former colleagues at the time expressed disbelief that he got caught up in the alleged misuse of customer funds, and they kind of found it hard to reconcile, you know, his really sincere devotion to doing good for the world with what FTX had allegedly become. Prosecution has now finished questioning Singh. What do you think the defense will be looking to do during the cross on Tuesday? Yeah, the defense needs to show that Bankman Freed wasn't orchestrating all of this, that, you know, there was no intent on the part of Bankman-Fried, as we've kind of been saying all along.

But one of the other hurdles for the defense has proven to be Bankman-Fried's access to his ADHD medication. Yes, and the defense has sent a letter to Judge Kaplan about Bankman-Fried's medication schedule, saying he isn't getting the Adderall he needs to concentrate during his trial. And in that letter, we actually got our first hint from the defense that Bankman-Fried may in fact take the stand in his own defense. They're saying that the Adderall he uses for his ADHD would be critical to the decision for him to testify, didn't they? Yeah, and this was a big

debate at the end of today. This was after the jury had been sent out and the government and defense lawyers were just kind of talking to Judge Kaplan. Bankman-Fried's attorneys had wanted a short adjournment to try and change the medication type that Bankman-Fried was given, the type of pill. But the judge was very clear that he is not a physician. He cannot prescribe drugs. And he said that he hasn't personally observed a problem with Bankman-Fried in court. So definitely more to come on that. That's all for today, Tuesday, October 17th. The Trial of Crypto's Golden Boy is part of The Journal,

which is a co-production of Spotify and The Wall Street Journal. I'm Caitlin Ostroff. And I'm Rachel Humphries. This episode was produced by Enrique Perez de la Rosa, and it was edited by Catherine Whelan. Additional reporting in this episode by James Finelli, Corinne Ramey, and Alex Osipovich. Our engineer is Peter Leonard. Our theme music is by So Wiley and remixed by Peter Leonard. Additional music in this episode by Peter Leonard. Thanks for listening. Check back here for trial updates.