Close Ally of FTX Founder Sam Bankman-Fried Pleads Guilty to Fraud

“I’m unbelievably sorry for my role in all of this and the harm that it has caused,” Mr. Singh, 27 years old, told U.S. District Judge

Lewis Kaplan.

Mr. Singh said that in mid-2022 he learned that Mr. Bankman-Fried’s crypto hedge fund Alameda Research was borrowing FTX customer funds. By September 2022, Alameda was no longer able to repay the billions of dollars that it had taken from FTX, Mr. Singh said. He said that, at the direction of Mr. Bankman-Fried, he falsified FTX’s revenues to make the company more appealing to investors.

“I had a strong belief that he would not share FTX’s full financial condition,” Mr. Singh said of Mr. Bankman-Fried.

Mr. Singh also pleaded guilty to defrauding the U.S. in a campaign-finance scheme. He admitted in court that he made illegal donations political-action committees and candidates using Alameda funds. The contributions were to enhance Mr. Bankman-Fried and FTX’s political influence, he said.

A spokesman for Mr. Bankman-Fried declined to comment.

The FTX founder’s trial is scheduled for October. Mr. Bankman-Fried in December was arrested and extradited from the Bahamas on fraud and conspiracy charges related to the implosion of FTX. Last week, prosecutors unveiled a new indictment charging him with additional crimes. Prosecutors said that Mr. Bankman-Fried stole billions of dollars of FTX customer funds, in addition to misleading investors and lenders.

Mr. Bankman-Fried has pleaded not guilty and denied committing fraud and stealing customer funds.

Under the terms of Mr. Singh’s plea agreement, he is required to testify at any trial if federal prosecutors request that he do so.

In parallel actions, the Securities and Exchange Commission and Commodity Futures Trading Commission on Tuesday filed civil fraud lawsuits against Mr. Singh.

Mr. Singh created software code that allowed FTX customer funds to be diverted to Alameda, and he knew Mr. Bankman-Fried was improperly using such funds for venture investments and other purposes, according to the SEC. In September and October, despite knowing about the shakiness of FTX and Alameda’s finances, Mr. Singh withdrew about $6 million from FTX for personal use, including the purchase of a house and charitable donations, the SEC alleged in its suit.

The SEC said that Mr. Singh had agreed to a settlement, subject to court approval, under which he would be barred from serving as an officer or director of a public company and pay a penalty, the size of which has yet to be determined. Similarly, the CFTC said Mr. Singh wasn’t contesting its claims.

Mr. Singh’s lawyers said that their client would do everything he could to make things right for FTX victims.

Mr. Singh’s plea follows similar admissions in December by former Alameda Chief Executive Caroline Ellison and Gary Wang, FTX’s former chief technology officer. Both pleaded guilty to fraud offenses and are cooperating with prosecutors.

Mr. Singh attended the same elite Silicon Valley prep school as Mr. Bankman-Fried and was close friends with his younger brother, Gabriel Bankman-Fried. He joined Alameda in late 2017 and became one of the key technical architects of FTX when the exchange launched in 2019.

As FTX was unraveling in November, Ms. Ellison told Alameda employees that four executives knew about the diversion of customer funds: herself, Mr. Bankman-Fried, Mr. Singh and Mr. Wang, according to a lawsuit filed by the SEC in December and previous reporting by The Wall Street Journal.

Like Mr. Bankman-Fried, Mr. Singh used his crypto wealth to become a political megadonor, showering millions of dollars last year on candidates, political-action committees and branches of the Democratic Party.

Last week’s new indictment of Mr. Bankman-Fried, while not identifying Mr. Singh by name, alleged he took part in a straw-donor scheme to funnel money to left-leaning candidates and causes that Mr. Bankman-Fried didn’t want connected to his own name. Another FTX executive backed conservative candidates as part of the scheme, aimed at winning influence in Washington, according to the indictment.

Write to James Fanelli at [email protected], Corinne Ramey at [email protected] and Alexander Osipovich at [email protected]

“I’m unbelievably sorry for my role in all of this and the harm that it has caused,” Mr. Singh, 27 years old, told U.S. District Judge

Lewis Kaplan.

Mr. Singh said that in mid-2022 he learned that Mr. Bankman-Fried’s crypto hedge fund Alameda Research was borrowing FTX customer funds. By September 2022, Alameda was no longer able to repay the billions of dollars that it had taken from FTX, Mr. Singh said. He said that, at the direction of Mr. Bankman-Fried, he falsified FTX’s revenues to make the company more appealing to investors.

“I had a strong belief that he would not share FTX’s full financial condition,” Mr. Singh said of Mr. Bankman-Fried.

Mr. Singh also pleaded guilty to defrauding the U.S. in a campaign-finance scheme. He admitted in court that he made illegal donations political-action committees and candidates using Alameda funds. The contributions were to enhance Mr. Bankman-Fried and FTX’s political influence, he said.

A spokesman for Mr. Bankman-Fried declined to comment.

The FTX founder’s trial is scheduled for October. Mr. Bankman-Fried in December was arrested and extradited from the Bahamas on fraud and conspiracy charges related to the implosion of FTX. Last week, prosecutors unveiled a new indictment charging him with additional crimes. Prosecutors said that Mr. Bankman-Fried stole billions of dollars of FTX customer funds, in addition to misleading investors and lenders.

Mr. Bankman-Fried has pleaded not guilty and denied committing fraud and stealing customer funds.

Under the terms of Mr. Singh’s plea agreement, he is required to testify at any trial if federal prosecutors request that he do so.

In parallel actions, the Securities and Exchange Commission and Commodity Futures Trading Commission on Tuesday filed civil fraud lawsuits against Mr. Singh.

Mr. Singh created software code that allowed FTX customer funds to be diverted to Alameda, and he knew Mr. Bankman-Fried was improperly using such funds for venture investments and other purposes, according to the SEC. In September and October, despite knowing about the shakiness of FTX and Alameda’s finances, Mr. Singh withdrew about $6 million from FTX for personal use, including the purchase of a house and charitable donations, the SEC alleged in its suit.

The SEC said that Mr. Singh had agreed to a settlement, subject to court approval, under which he would be barred from serving as an officer or director of a public company and pay a penalty, the size of which has yet to be determined. Similarly, the CFTC said Mr. Singh wasn’t contesting its claims.

Mr. Singh’s lawyers said that their client would do everything he could to make things right for FTX victims.

Mr. Singh’s plea follows similar admissions in December by former Alameda Chief Executive Caroline Ellison and Gary Wang, FTX’s former chief technology officer. Both pleaded guilty to fraud offenses and are cooperating with prosecutors.

Mr. Singh attended the same elite Silicon Valley prep school as Mr. Bankman-Fried and was close friends with his younger brother, Gabriel Bankman-Fried. He joined Alameda in late 2017 and became one of the key technical architects of FTX when the exchange launched in 2019.

As FTX was unraveling in November, Ms. Ellison told Alameda employees that four executives knew about the diversion of customer funds: herself, Mr. Bankman-Fried, Mr. Singh and Mr. Wang, according to a lawsuit filed by the SEC in December and previous reporting by The Wall Street Journal.

Like Mr. Bankman-Fried, Mr. Singh used his crypto wealth to become a political megadonor, showering millions of dollars last year on candidates, political-action committees and branches of the Democratic Party.

Last week’s new indictment of Mr. Bankman-Fried, while not identifying Mr. Singh by name, alleged he took part in a straw-donor scheme to funnel money to left-leaning candidates and causes that Mr. Bankman-Fried didn’t want connected to his own name. Another FTX executive backed conservative candidates as part of the scheme, aimed at winning influence in Washington, according to the indictment.

Write to James Fanelli at [email protected], Corinne Ramey at [email protected] and Alexander Osipovich at [email protected]