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<p>The post <a rel="nofollow" href="https://coinpedia.org/news/former-ftx-head-of-engineering-admits-to-financial-crimes-implicates-iconic-figurehead-sam-bankman-fried/">Former FTX Head of Engineering Admits to Financial Crimes, Implicates Iconic Figurehead Sam Bankman-Fried</a> appeared first on <a rel="nofollow" href="https://coinpedia.org">Coinpedia Fintech News</a></p> 
<p>Nishad Singh, former Head of Engineering at FTX, admitted to financial crimes during his tenure at the company in a courtroom trial. The confession implicates other top brass, including the iconic figurehead of FTX, Sam Bankman-Fried (SBF), in criminal activities that range from defrauding customers to money laundering.</p> 
<p>Singh’s testimony was jaw-droppingly straightforward. He openly admitted to defrauding customers and investors, participating in money laundering, and violating campaign finance laws. This shocking confession highlights a string of alleged malpractices that could dismantle the faith investors and the public have in cryptocurrency markets.</p> 
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   <p lang="en" dir="ltr">The need for liquidity in the 2022 Terra Luna crypto crash<br><br>The idea of potentially purchasing lenders like Celsius, Voyager and BlockFi had two purposes:<br>1. To bail out the space;<br>2. “to make Alameda have access to more funds to borrow”<br><br>Q. You mentioned a few things: Borrowing,…</p>— BitMEX Research (@BitMEXResearch) <a href="https://twitter.com/BitMEXResearch/status/1714057043739316733?ref_src=twsrc%5Etfw">October 16, 2023</a>
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<p>In the aftermath of the 2022 Terra Luna crypto crash, Singh revealed that conversations were held within the company about the potential acquisition of major lending platforms like <a href="https://twitter.com/BitMEXResearch/status/1714051103422095829">Celsius, Voyager, and BlockFi</a>. The twin goals were purportedly to bail out the ailing space and to provide FTX’s parent company, Alameda, with more capital to borrow.</p> 
<p><strong>Fiat Deposits Used as Personal Coffers</strong></p> 
<p>From the very inception of FTX, <a href="https://twitter.com/BitMEXResearch/status/1714058672693739529">customer fiat deposits</a> were channeled into Alameda’s bank accounts. This became problematic, as Singh admitted that Alameda would siphon these funds for its use, blatantly violating customer trust.</p> 
<h2 class="wp-block-heading" id="h-the-unthinkable-no-clawbacks"><strong>The Unthinkable: No Clawbacks</strong></h2> 
<p>In a disclosure that could send shockwaves through the industry, Singh confirmed that FTX never implemented any system to deal with liquidation losses. Known as clawbacks, these mechanisms resolve losses that may arise when an account is liquidated at a worse rate than its initial bankruptcy price. The absence of such a system could expose the firm to severe regulatory actions and lawsuits.</p> 
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   <p lang="en" dir="ltr">FTX never implemented liquidations. If a customer was liquidated at price worse than the bankruptcy price, FTX never implemented any system to deal with that loss.<br><br>Q. What's a clawback?<br>A. A clawback is a mechanism for resolving any losses that arise from a liquidation. And by…</p>— BitMEX Research (@BitMEXResearch) <a href="https://twitter.com/BitMEXResearch/status/1714063854806688085?ref_src=twsrc%5Etfw">October 16, 2023</a>
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<h2 class="wp-block-heading" id="strong-malpractices-with-serum-tokens-strong"><strong>Malpractices with Serum Tokens</strong></h2> 
<p>According to Singh, there was an internal push to make Alameda’s balance sheet appear more robust than it was. He described an event where SBF asked him to transfer Serum tokens into Alameda’s main account to <a href="https://twitter.com/BitMEXResearch/status/1714066586712060048">inflate its collateral</a>, further eroding the line between ethical practices and financial manipulation.</p> 
<h2 class="wp-block-heading" id="strong-controversial-deal-with-telegram-the-final-straw-strong"><strong>Controversial Deal with Telegram: The Final Straw?</strong></h2> 
<p>In another alarming revelation, Singh recounted that SBF sought to strike a <a href="https://twitter.com/BitMEXResearch/status/1714071716823982590">$120 million deal with Telegram for their TON tokens</a>. The deal, aimed at creating a payment-processing service for Telegram, was pushed forward despite reservations expressed by Singh and others about the solvency and the liquidity of such tokens.</p> 
<p>Nishad Singh’s testimony exposes the internal dysfunction at FTX and raises critical questions about the integrity of the cryptocurrency industry at large. Regulators will no doubt take these admissions as a clarion call for tightening controls, while investors and customers must reevaluate the security and ethical foundations of their chosen platforms.</p> 
<p>This is not just a scandal; it’s an alarming wake-up call that reaches the core of cryptocurrency trading and governance.</p>

Former FTX Head of Engineering Admits to Financial Crimes, Implicates Iconic Figurehead Sam Bankman-Fried

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