​US authorities launch investigation into former FTX chief engineer

US authorities are ratcheting up pressure on Sam Bankman-Fried’s inner circle as they scrutinize former close FTX associate Nishad Singh, according to people familiar with the matter.

If federal prosecutors in Manhattan find Singh had a role in the alleged multiyear scheme at FTX and trading firm Alameda Research to defraud investors and clients, he could be charged as soon as this month, said one of the people. The Securities and Exchange Commission and the Commodity Futures Trading Commission are also probing Singh, said the person, who asked not to be identified discussing the matter.

The scrutiny of Singh, who until recently lived with Bankman-Fried in a Bahamas penthouse and was a high school friend of his younger brother, Gabe, presents the latest legal threat to Bankman-Fried as he fights a slew of criminal charges. Former close associates Caroline Ellison and Gary Wang have pleaded guilty to fraud in connection to their roles at Alameda and FTX and are working with authorities.

It’s unclear whether Singh, who hasn’t been accused of wrongdoing, is cooperating with US officials or will do so. Andrew D. Goldstein, a lawyer for Singh, declined to comment, as did representatives for the US Attorney’s Office for the Southern District of New York, SEC and CFTC. Goldstein previously served as the chief of SDNY’s public corruption unit, which is now part of a special FTX task force.

The ongoing, sprawling investigation into November’s spectacular collapse of FTX is one of the highest-profile corporate crime cases in US history. Prosecutors and regulators have alleged that Bankman-Fried orchestrated a years-long scam, which involved misleading investors and misusing billions of dollars of FTX customer funds to pay off debts and expenses of Alameda, the trading firm he also founded.

Bankman-Fried pleaded not guilty on Tuesday to criminal charges. Before his downfall, the former FTX chief executive embraced his role as the face of a sprawling web of crypto businesses and rode it to stardom and riches. The 30-year-old was a billionaire and appeared on stages around the world flanked by politicians, celebrities and athletes, touting the exchange and digital assets.Behind the scenes, Ellison, former chief executive of Alameda; Wang, who co-founded FTX; and Singh formed the backbone of Bankman-Fried’s inner circle. Singh was also known as a gifted coder and philanthropist.

The exact scope of the probe into Singh’s role and activities at FTX isn’t known. Bloomberg News last month reported on documentation that showed a GitHub account bearing Singh’s name authored code that hid Alameda’s ballooning liabilities. GitHub is a repository that companies and individual software developers use to store and share code. The documentation reviewed by Bloomberg was in the form of comments associated with specific lines of code.

It wasn’t immediately clear whether any other FTX employees had access to the account. Singh hasn’t responded to requests for comment on the code.

Plea agreements for Ellison and Wang released last month said prosecutors will recommend reduced sentences for the pair if they provide “substantial assistance” to the investigation.

Damian Williams, the US Attorney for the Southern District of New York, signaled last month that authorities planned to dig further into Bankman-Fried’s close associates as part of their investigation. “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal,” he said without mentioning anyone by name.

Singh, like Bankman-Fried, was a prolific donor to Democratic candidates. He’s given more than $9.3 million since 2020, Federal Election Commission records show.

Prosecutors have alleged that Bankman-Fried, who according to US bankruptcy filings received $1 billion in loans from Alameda, used and laundered customer funds through political donations, charitable giving and other investments.

Singh borrowed $543 million from Alameda, according to bankruptcy documents. Authorities haven’t said that the money was used inappropriately.

— With assistance by Ava Benny-Morrison, Hannah Miller, Bill Allison, Amanda Albright, Gillian Tan and Beth Williams

This material is taken from the website bloomberg.com.