Nishad Singh, a Sam Bankman-Fried underling, testified on Monday that the disgraced former FTX CEO had his employees make political donations in his name despite the company’s massive shortfall.
Singh, the third FTX insider to testify against Bankman-Fried, said in court that despite the digital currency platform’s financial problems in September 2022, he continued to receive funds from Alameda Research, the hedge fund associated with FTX, and allow FTX associates to use the money to donate to Democrat candidates in what he referred to as a “straw donor” scheme.
(Yuki Iwamura/Bloomberg/Getty Images)
A straw donor scheme occurs when “a donor first gives funds to another person or entity – often a shell company created for this purpose – which then contributes those funds to a political committee.”
Reuters reported:
Prosecutors say Bankman-Fried looted billions of dollars in customer funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns to burnish his influence. He has pleaded not guilty, and argues that while he made mistakes running FTX, he did not steal funds.
The testimony from Singh, who pleaded guilty in February to wire fraud and conspiracy to violate campaign finance laws, gave the jury the most vivid insight so far into how Bankman-Fried – who, liked Singh, professed to believe in a movement called effective altruism that encouraged young people to earn high salaries and give to charity – spent the money prosecutors say was stolen.
Bankman-Fried directed more political donations despite learning about the company’s $13 billion in debt to customers.
Breitbart News had reported that Bankman-Fried had aimed to outpace George Soros during the 202 midterm elections as the largest Democrat megadonor.
In a March 2021 interview, Bankman-Fried took credit as one of the people “most responsible” for Biden being president.
Singh said that FTX often used a Signal group chat to direct whether political donations would be made in the name of Sam Bankman-Fried-, Gabriel Bankman-Fried, SBF’s brother, or one of his other executives, such as Ryan Salame.
“I was a straw donor for campaign donations. I knew that the money for those donations was coming from customer funds,” he testified.
Singh said that it would provide “advantageous optics” for some of the funds to come from another person as he had become known as a major donor.
Prosecutors also showed a spreadsheet that explained how FTX spent $1.1 billion in endorsement deals, which included the naming rights of the Miami Heat’s basketball arena, as well as celebrity endorsements from famed NFL quarterback Tom Brady, model Gisele Bundchen, basketball star Steph Curry, and comedian Larry David.
Another unnamed FTX executive had told Singh that the endorsement deals were meant to increase user growth despite Singh’s concerns about the “excess and flashiness” of the promotions.
After Singh urged Bankman-Fried to cancel the endorsements, Bankman-Fried called the call to cancel the deals “shortsighted.” FTX declared bankruptcy two months later.
Bankman-Fried stands accused of seven counts of fraud, conspiracy, and money laundering on his alleged use of FTX customer funds to cover the losses of his hedge fund, Alameda Research. He also allegedly used those funds to purchase real estate and cover other personal expenses. Bankman-Fried pled not guilty to all counts and faces up to 110 years in prison.
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.