Former FTX head of engineering fined $3.7M to resolve CFTC lawsuit

Singh faced legal action from the SEC, CFTC and US Department of Justice after FTX collapsed in November 2022 but avoided significant prison time by cooperating with authorities.

Nishad Singh, the former head of engineering at FTX, will pay $3.7 million to resolve his case with the US commodities regulator over his role in the collapse of the crypto exchange and the misappropriation of user funds.

As part of the supplemental consent order, Singh will be required to pay a disgorgement of $3.7 million, while a five-year ban on trading in markets and an eight-year registration ban are imposed, blocking him from obtaining a license to operate in the sector, the US Commodity Futures Trading Commission (CFTC) said in a statement on Wednesday.

“The initial consent order and supplemental consent order resolve the CFTC’s enforcement action against Singh,” it added.

FTX’s bankruptcy in November 2022 sent shock waves through the crypto industry, erasing billions in market liquidity, shattering user confidence and prompting authorities to accuse its leadership of fraud.

David Miller, the CFTC’s director of enforcement, did not impose additional restitution or civil monetary penalties for now and said the current penalties reflect Singh’s cooperation with authorities.

“The defendant engaged in, and aided, significant violations of the Act and CFTC regulations as the former FTX head of engineering, and the consent orders reflect the severity of these violations,” Miller said.

“But this resolution also reflects the Commission’s commitment to rewarding and incentivizing material assistance in Division investigations,” he added.

Attorneys for Singh said he was grateful this latest matter was at an end, and were “pleased that the CFTC recognized our client’s limited role in the underlying conduct and his extensive cooperation,” according to Bloomberg.

The CFTC accused Singh of personally misappropriating millions of dollars in assets and charged him in February 2023 with two counts: fraud by misappropriation and aiding and abetting fraud committed by former FTX CEO Sam Bankman-Fried.

Related: FTX Recovery Trust to distribute $2.2B to creditors in March

In April 2023, Singh entered into the consent order, was found liable for the charges and agreed to cooperate with the commission's investigators. The regulator originally sought a range of penalties, including restitution, civil monetary penalties and permanent trading and registration bans.

In a separate case brought by the Securities and Exchange Commission in February 2023, Singh was accused of misusing customer funds and committing fraud by misappropriation, in violation of securities laws. The case was settled in December with Singh receiving an eight-year industry ban.

After FTX collapsed, US prosecutors also indicted Singh and four of his colleagues on charges including fraud and campaign finance violations. He faced decades in prison if found guilty, but after testifying against Bankman-Fried and cooperating with prosecutors, he received time served and three years of supervised release.

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Source: CoinTelegraph