Sam Bankman-Fried directed political donations despite $13 billion hole, former colleague confirms

NEW YORK, Oct 16 — Sam Bankman-Fried ordered money from his hedge fund Alameda Research to be used for political donations after he learned the fund owed $13 billion to clients of his cryptocurrency exchange FTX, a former executive said Monday.

Nishad Singh, the third former member of Bankman-Fried’s inner circle to testify against him at his fraud trial, said he learned of the shortfall in September 2022 and confronted Bankman-Fried in an hour-long conversation on the balcony of a $35 million Bahamas penthouse dollars, which they share.

Singh said Bankman-Fried assured him he would raise more funds and cut costs. But in the meantime, Singh said he continued to receive transfers from Alameda and allowed Bankman-Fried associates to use the money to donate to U.S. Democratic candidates and other charities, in what he called a “straw donor” scheme.

“There was a huge hole there,” said Singh, the former CTO of FTX. “Alameda sent me money to spend… making sure to deepen this hole.”

Prosecutors allege Bankman-Fried stole billions of dollars in client funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns to increase his influence. He has pleaded not guilty and maintains that while he made mistakes in managing FTX, he did not steal the funds.

Testimony from Singh, who pleaded guilty in February to wire fraud and conspiracy to violate campaign finance laws, gave jurors the most vivid insight yet into how Bankman-Fried, who like Singh has said he believes in a movement called Through effective altruism, it encouraged young people to earn high salaries and engage in charity work – money spent, according to prosecutors, that was stolen.

Prosecutors presented a spreadsheet from March 2023 detailing $1.1 billion in FTX endorsement deals that included naming rights to the Miami Heat basketball arena as well as arrangements with NFL quarterback Tom Brady, model Gisele Bündchen, basketball star Steph Curry and comedian Larry David.

They showed jurors a photo of Bankman-Fried at the 2022 NFL Super Bowl with singer Katy Perry, actor Orlando Bloom and Michael Keaves, a former Hillary Clinton aide who ran the K5 investment firm that Singh said Bankman-Fried called “the one.” -stop shop” to gain access to influential people.

Singh said another FTX executive told him the deals were meant to spur user growth. But Singh said the deals “smelled of excess and window dressing” and that he urged Bankman-Fried to cancel them as soon as he learned of the shortfall in clients’ funds.

“It’s crazy, we need to cut them as much as possible,” Singh told the 31-year-old former billionaire in September 2022.

According to Singh, Bankman-Fried said the proposal to cancel the deals was “short-sighted.” FTX filed for bankruptcy two months later after a wave of customer departures.

“I WAS A STRAW DONOR”

Bankman-Fried’s trial, which began Oct. 3, has so far largely focused on how prosecutors say Bankman-Fried allowed Alameda to steal funds from FTX clients. The jury has already heard from Gary Wang, the former chief technology officer of FTX, and Caroline Ellison, the former CEO of Alameda and Bankman-Fried’s former girlfriend.

Singh gave jurors a glimpse into Bankman-Fried’s political activities. He said he often allowed Guarding Against Pandemics, a political action group run by Bankman-Frida’s younger brother Gabriel, to use his name to donate funds coming from Alameda.

Singh described a Signal group chat in which Sam Bankman-Fried, Gabrielle Bankman-Fried or one of their political advisers often gave instructions to make a donation in Singh’s name.

He said another FTX executive, Ryan Salameh, had access to his bank account to make donations through bank transfers. He said he also gave one of Gabriel Bankman-Fried’s aides several signed blank checks.

“I was a straw donor for campaign contributions,” Singh said. “I knew that the money for these donations came from client funds.”

Bankman-Fried became known as a major Democratic donor after founding FTX in 2019. But Singh said it would provide “favorable optics” for some funds to look like they came from someone else.

Bankman-Fried’s lawyers are expected to cross-examine Singh on Tuesday. Prosecutors said they could drop the case as early as Oct. 26, after which Bankman-Fried would have the opportunity to present his defense.

Defense attorneys said Bankman-Fried, who suffers from attention deficit hyperactivity disorder, needed a higher dose of Adderall than what he received every morning in jail to fully participate in his defense and decide whether to testify.

U.S. District Judge Lewis Kaplan on Monday rejected the defense’s request to delay the trial to explore options for increasing the dosage.

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