• Nishad Singh, ex-Co-Lead Engineer of FTX Trading Ltd., has been charged by the SEC for his role in a multi-year scheme to defraud equity investors in FTX.
• Singh developed a software code that facilitated the transfer of FTX customer funds to Alameda Research, a crypto hedge fund co-owned by Samuel Bankman-Fried and Gary Wang.
• The SEC is looking to obtain an injunction against committing future violations of securities law, as well as the return of profits obtained by illicit means, a financial penalty, and a prohibition against serving as an officer or director.
SEC Charges Former Co-Lead Engineer Of FTX For Fraud
The Securities and Exchange Commission (SEC) has charged Nishad Singh, former Co-Lead Engineer of FTX Trading Ltd., with actively participating in a multi-year scheme to deceive equity investors in FTX. According to the SEC, this fraud resulted in customer funds being diverted to Alameda Research, a crypto hedge fund owned by Sam Bankman-Fried and Gary Wang.
Overview Of The Alleged Fraud
The complaint from the SEC aims to obtain an injunction against committing future violations of securities law, as well as the return of profits obtained by illicit means, a financial penalty, and a prohibition against serving as an officer or director. Additionally, it alleges that Singh knew or should have known that false assurances given by Bankman-Fried to investors about FTX’s risk mitigation measures were misleading. It is reported that Singh withdrew around $6 million from the company for personal use and expenses before it approached collapse.
Singh Agrees To Settlement
In order to settle this case with the SEC, Singh has agreed to pay certain penalties and fees pending court approval. These payments will be divided into parts and are intended to cover all costs associated with his involvement in this fraud case.
Impact On Crypto Community
This case highlights how serious financial crimes can have major implications on investor confidence within the crypto community. In response to these charges being brought forward by the SEC against Nishad Singh, many members of this community have voiced their concern over such cases damaging trust within this industry more broadly.
The charges filed against former Co-Lead Engineer of FTX Trading Ltd., Nishad Singh serve as reminder that criminal activity within cryptocurrency markets will not be tolerated under securities law regulations. As such cases continue surface throughout 2021 and beyond it is vital that industry participants remain aware legal obligations when dealing with digital assets or related technologies like blockchain technology so they do not find themselves at risk similar allegations being brought forth by government regulators like the SEC.