Former FTX exec testifies that SBF lashed out at criticism of company spending
A top executive at failed crypto exchange FTX testified Monday that he grew uncomfortable with the company's lavish spending directed by his old boss, Sam Bankman-Fried.
- Singh actually knew Bankman-Fried — known simply as SBF — going back to childhood, as a good friend of the defendant's younger brother.
What they're saying: "I was always intimidated by Sam," Singh testified, calling him a "formidable character."
- Over time, however, he said, "I grew distrustful."
Details: Singh, FTX's former engineering director, portrayed himself as less central to the company's decisions outside of that department.
- His awareness of many matters was more informal, a product of being on key text chat lists and living with SBF in the same apartment.
When the team relocated to the Bahamas, the core members wanted to live together in the same apartment. Singh said they had found one less pricey than "The Orchid," where the key members ultimately lived together.
- "Sam is a fan of views," Singh explained.
In 2020, as FTX and Alameda began to be more widely discussed, Singh — who pled guilty in February to fraud and conspiracy charges relating to his own role in FTX's collapse — said he became frustrated that they were taking on an appearance of profligate spending.
- He testified that he felt "embarrassed and ashamed" and that "it didn't align with what I thought we were building the company for."
- SBF, he testified, grew defensive when questioned about FTX's outlays.
Between the lines: On one such occasion, he said Sam yelled at him in front of others. "He said it was people like me sowing doubt in the company that were the real insidious problem," Singh told the jury.
The prosecution focused in particular on an investment by FTX in the venture arm of K5 Global.
- SBF became eager to establish a relationship there after attending a K5 executive's Super Bowl party featuring high-level influencers, including movie stars and ex-politicians, Singh said.
- The fee schedule for the term sheet laid out by SBF contained millions of dollars in bonuses to members of the K5 team.
- "I was concerned that K5 was value extractive," Singh said.
By the numbers: Celebrities accounted for more than $1 billion in endorsement fees for FTX, according to a spreadsheet shown by the prosecution.
Zoom out: Singh said he owned 6 or 7% of FTX. At the time, he said that had made him a billionaire.
- Until September 2022, Singh said he had always believed that the trading firm, Alameda, had plenty of money. It was only then that he learned it had dug an $8 billion hole in FTX's balance sheet.
The intrigue: Singh also testified that he had participated in writing the code that allowed Alameda to take its account into negative balance, which no other account could do. It wasn't until much later that he would see it had reached negative $2.7 billion.
- "It seemed like a real abuse of a feature that, I believed, until this point, was serving FTX, not hurting it," Singh said.
- "This was not a small amount. It did not strike me as incidental."