1.Nishad Singh — Cross (Part 2)
1,270 linesUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 22 CR 673 (LAK) SAMUEL BANKMAN-FRIED, Defendant. Trial
New York, N.Y. October 17, 2023 9:40 a.m. Before: HON. LEWIS A. KAPLAN, District Judge APPEARANCES DAMIAN WILLIAMS United States Attorney for the Southern District of New York BY: DANIELLE R. SASSOON NICOLAS ROOS DANIELLE KUDLA SAMUEL RAYMOND THANE REHN Assistant United States Attorneys COHEN & GRESSER, LLP Attorneys for Defendant BY: MARK S. COHEN CHRISTIAN R. EVERDELL SRI K. KUEHNLENZ DAVID F. LISNER Also Present: Luke Booth, FBI Kristin Allain, FBI Arjun Ahuja, USAO Paralegal Specialist Grant Bianco, USAO Paralegal Specialist
Pages 1488-1490 SEALED by order of the Court)
(In open court; jury not present)
JUDGE KAPLAN: Good morning, everyone.
Let's get the jury and let's get the witness.
MR. ROOS: Judge, while we're waiting for folks, there's a few admissibility disputes between the parties on some expert exhibits that would come in tomorrow. I was hoping we could raise them with the Court sometime today. It doesn't have to be——any time before the end of the day. It's up to your Honor.
JUDGE KAPLAN: I'll try to keep that in mind.
(Continued on next page)
(Jury present)
JUDGE KAPLAN: Good morning, folks. I hope you had a nice evening.
Mr. Singh, you're still under oath.
The record will reflect the jurors and the defendant all are present, as they have been throughout.
Cross-examination, Mr. Cohen.
MR. COHEN: Thank you, your Honor. NISHAD SINGH, resumed.
CROSS EXAMINATION BY MR. COHEN:
MR. COHEN: Good morning, Mr. Singh.
NISHAD SINGH: Good morning.
MR. COHEN: I'd like to ask you, if I ask you a question that you can answer yes or no, please do so.
NISHAD SINGH: Sounds good.
MR. COHEN: Do you recall yesterday you testified about FTX's business spending?
NISHAD SINGH: Yes.
MR. COHEN: Things like sponsorships and venture investments, correct?
NISHAD SINGH: Yes.
MR. COHEN: And I believe you testified at page 1313 that you thought the spend was too large or didn't make sense. Do you recall that, sir?
NISHAD SINGH: I don't recall exactly what I said. In many instances I thought it was too large or didn't make sense, not in all.
MR. COHEN: Okay. Fair to say that in certain instances you disagreed with the business rationale for the spend?
NISHAD SINGH: Right.
MR. COHEN: You thought that spending on such items was too large.
NISHAD SINGH: Right.
MR. COHEN: And is it fair to say that at certain times Sam had a different business judgment as to that spend?
NISHAD SINGH: Frequently.
MR. COHEN: And Sam ran the business side of FTX, correct?
NISHAD SINGH: Yes.
MR. COHEN: Now did FTX have a marketing group?
NISHAD SINGH: It had a lot of employees that worked on marketing in some capacity.
MR. COHEN: And from time to time those employees would make recommendations to Sam about marketing initiatives, correct?
MR. COHEN: I'll rephrase, your Honor.
JUDGE KAPLAN: Yes, please.
MR. COHEN: Do you know if from time to time the marketing group would make recommendations to Sam?
JUDGE KAPLAN: Overruled.
The question is whether you know one way or the other.
NISHAD SINGH: Yes, I read in Slack——
JUDGE KAPLAN: No, no, no. The answer was yes. Just stop there.
MR. COHEN: Let's talk for a moment about sponsorships. Was it your view, Mr. Singh, that FTX shouldn't have any corporate sponsorships?
NISHAD SINGH: I'm not sure that I had a view that extreme. I don't think I had a very precise view on what should happen.
MR. COHEN: If we could pull up Government Exhibit 343 in evidence, please.
MR. COHEN: This is a document entitled List of Sponsorships. Do you recall going over this with us yesterday, Mr. Singh?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And counsel directed you to line 3.
MR. COHEN: Brian, could we have line 3.
MR. COHEN: And that was the sponsorship for the Miami-Dade FTX Arena. Do you see that, Mr. Singh?
NISHAD SINGH: Yes.
MR. COHEN: And you told us yesterday about the spend of 135 million on that sponsorship, correct?
NISHAD SINGH: Yes.
MR. COHEN: Okay. Now why don't we——Brian, if we might expand this and cover some things that weren't covered yesterday.
Let's take a look at the——Brian, move it a little bit more to my right.
Okay. Other way. Other way. Okay. That's good.
BY MR. COHEN:
MR. COHEN: All right. If you can look at the heading that I'm circling, Mr. Singh, Deal Start Date and Duration, do you see that, sir?
NISHAD SINGH: I do.
MR. COHEN: Is it fair to say that for the Miami-Dade FTX Arena, the duration of the sponsorship was 19 years?
NISHAD SINGH: Yes, that's what this suggests.
MR. COHEN: Okay. With a start date of March 22, 2021.
NISHAD SINGH: That's what the spreadsheet says.
MR. COHEN: Okay. If we could continue, Brian, moving along on that same row, to the right.
If you go to the column entitled Outlay, and Brian, bring that all the way over, please.
MR. COHEN: And that shows, Mr. Singh, the outlay per year of this $135 million commitment, correct?
MR. COHEN: Do you see that, sir?
JUDGE KAPLAN: Well, just a minute. We're not performing eye examinations here.
MR. COHEN: Sorry, Judge.
JUDGE KAPLAN: I mean, it says what it says.
MR. COHEN: Okay.
MR. COHEN: Now, Mr. Singh, this sponsorship of the FTX Arena was aimed at promoting FTX's brand and awareness, correct?
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you have a view about whether or not it was a useful thing to promote FTX's brand?
JUDGE KAPLAN: Ground?
MR. COHEN: This was——
JUDGE KAPLAN: Pardon me?
MR. COHEN: I'm sorry. I didn't mean to interrupt your Honor.
JUDGE KAPLAN: Go ahead. I'm looking to you for a response.
MR. COHEN: Oh. This was covered yesterday, and this is relevant because yesterday we were told that this was excessive spend with no purpose.
JUDGE KAPLAN: Overruled.
BY MR. COHEN:
MR. COHEN: You can answer my question, Mr. Singh.
NISHAD SINGH: Do you mind repeating it.
MR. COHEN: Let's read it back.
JUDGE KAPLAN: The question was: "Did you have a view about whether or not it was a useful thing to promote FTX's brand?" That's the question. Please answer it. A. I understood that it had business benefits and costs. The specific, you know——if I specifically thought any given transaction was useful depended on the details of that transaction.
MR. COHEN: And the business benefits and costs were for Sam to weigh, correct?
NISHAD SINGH: Yes.
MR. COHEN: All right. We can take that down, Brian.
MR. COHEN: Now you also mentioned yesterday——you covered a topic of venture spending. Do you recall that, Mr. Singh?
NISHAD SINGH: Yes.
MR. COHEN: And one of the topics you covered was a company called K5. Do you recall that?
NISHAD SINGH: I do.
MR. COHEN: And that was a company run by, among others, Michael Kives, correct?
NISHAD SINGH: Oh, forgive my pronunciation yesterday. Yes.
MR. COHEN: Can we pull up Government Exhibit 42, please.
MR. COHEN: Do you recall going over this with counsel yesterday?
NISHAD SINGH: Yes.
MR. COHEN: And if you look at the second line from the top, Mr. Bankman-Fried stated that "Mr. Kives is probably the most connected person I've ever met. In attendance at the dinner at his house were:" and then it lists a number of people who you identified. Do you recall that?
NISHAD SINGH: I do.
MR. COHEN: Okay. Did you——based on your working at FTX, did you have a view about whether there was a value in having connection with celebrities and entrepreneurs?
NISHAD SINGH: Yes, I believed that it could be valuable for the business.
MR. COHEN: Depending on the circumstances, correct?
NISHAD SINGH: Right. Depending on the circumstances.
MR. COHEN: And I believe you testified that you discussed with Mr. Bankman-Fried that someone like Mr. Kives could be a one-stop shop for such relationships, correct?
NISHAD SINGH: I discussed that in that Sam told me that, that it could be a one-stop shop for relationships.
MR. COHEN: And this would eliminate the need to have multiple brokers trying to develop such relationships, correct?
NISHAD SINGH: I don't remember exactly what words Sam used, but he, in this document, says something to that effect, and I recall something to that effect being said in person to me.
MR. COHEN: Did you agree with that, sir?
NISHAD SINGH: I didn't know. I didn't know who the other brokers were or the quality of the relationships Michael Kives had with these people.
MR. COHEN: So you had no view on whether it was better to have one person or multiple brokers.
NISHAD SINGH: There was a cost of juggling multiple, but all else equal, having more connections is better.
MR. COHEN: Now we can take that down, Brian.
MR. COHEN: Based on your interaction with Mr. Bankman-Fried, did you have any understanding about whether or not the relationship with K5 involved something more than being in a broker relationship?
JUDGE KAPLAN: Mr. Cohen, what do you say to that?
MR. COHEN: I asked his understanding, your Honor.
JUDGE KAPLAN: Yes, I understand. Why is his understanding on that appropriate?
MR. COHEN: Because, your Honor, again, yesterday we were told these were all reckless and frivolous investments, and I'm entitled to show that there was way more to it than we were told yesterday, so that's the relevance.
JUDGE KAPLAN: I'll allow it for a moment, anyway.
MR. COHEN: Okay. All I need is a moment, your Honor.
Can we read the question back, please.
JUDGE KAPLAN: Please read it back.
(Record read)
NISHAD SINGH: I know at least one other project that did not itself seem like it was just exercising K5's ability as a broker.
MR. COHEN: What was that project, Mr. Singh?
NISHAD SINGH: Sam investing in a tequila brand run by a famous celebrity.
MR. COHEN: Okay. You also mentioned that in addition to the Kives relationship there were other venture investments that FTX spent on. Do you recall that, sir?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And you mentioned I believe a mining company, correct?
NISHAD SINGH: Bitcoin mining company.
MR. COHEN: Bitcoin mining. And the judge explained to all of us that wasn't an in-the-ground mining company, correct?
NISHAD SINGH: And I tried my best and likely failed to clarify further.
MR. COHEN: Now did you participate, Mr. Singh——let me back up.
Have you ever heard the term "due diligence"?
NISHAD SINGH: Yes.
MR. COHEN: What does it mean to you?
NISHAD SINGH: The process of analyzing the internals of a company to understand how it functions.
MR. COHEN: And is that done prior to investing in a company?
NISHAD SINGH: In general.
MR. COHEN: Okay. Did you participate in any of the due diligence relating to the venture investments you described yesterday?
NISHAD SINGH: Give me a moment. I'm trying to think about if there is even a single one.
I did for Anthropic.
MR. COHEN: And just to remind the jury, Anthropic was the AI company, correct?
NISHAD SINGH: Yes.
MR. COHEN: And you participated in the due diligence in determining whether to make the investment, correct?
NISHAD SINGH: Not quite. The investment was first made, the large one, from Sam, and I was really proud of it, and I also wanted to make an investment, or view it as a donation, and so I separately went and talked with the Anthropic folks.
MR. COHEN: So you asked to make a personal investment in the Anthropic company, correct?
NISHAD SINGH: No. Initially I thought it would be further investment or donation from Alameda.
MR. COHEN: Didn't you just say you wanted to personally invest?
NISHAD SINGH: I wanted to be personally involved.
MR. COHEN: Okay. Mr. Singh, can we try my question. Did you personally——did you——were you interested in personally investing in Anthropic?
NISHAD SINGH: Before——
MR. COHEN: At any time.
NISHAD SINGH: Yeah, at any time, yes, at one point I was.
MR. COHEN: Now you also testified yesterday about spending on Bahamas properties. Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: Can we call up GX 3, please.
MR. COHEN: Do you recall providing testimony about GX 3, which was the list of the properties purchased in the Bahamas? Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. Just quickly, before I forget, No. 2, it says Albany Lot 44, Conch Shack. Do you see that, sir?
NISHAD SINGH: Yes.
MR. COHEN: What was that?
NISHAD SINGH: This was a house that was conveyed or——that was conveyed to Constance Wang or just one that she lived in.
MR. COHEN: Okay. And we can take this down.
MR. COHEN: I believe you testified that you and Mr. Bankman-Fried and others, eight in total, wanted to live together in the Bahamas, correct?
NISHAD SINGH: I forget if it was exactly eight, but yes, a group of us wanted to live together.
MR. COHEN: Fair enough. You and your girlfriend?
NISHAD SINGH: Yes.
MR. COHEN: Mr. Bankman-Fried?
NISHAD SINGH: Yes.
MR. COHEN: Mr. Yedidia and his girlfriend?
NISHAD SINGH: Yes.
MR. COHEN: Others. Correct?
NISHAD SINGH: Yes.
MR. COHEN: So you told us that you looked for——you looked for housing and you saw a place that was less expensive than the penthouse that was ultimately purchased. Do you recall that, sir?
NISHAD SINGH: A few places, yes.
MR. COHEN: Few places. And when Mr. Bankman-Fried indicated he was interested in the Orchid 6 penthouse, you had a substantial disagreement. You told us that yesterday.
NISHAD SINGH: I had a disagreement.
MR. COHEN: You didn't say substantial disagreement yesterday?
NISHAD SINGH: I forget exactly what I said yesterday.
MR. COHEN: Didn't you tell us yesterday that you thought it was really expensive and super ostentatious?
NISHAD SINGH: Yes.
MR. COHEN: Okay. But Mr. Bankman-Fried went ahead, went ahead with the purchase anyway, correct?
NISHAD SINGH: Right.
MR. COHEN: And then you moved into the apartment.
NISHAD SINGH: I did.
MR. COHEN: You and your girlfriend lived in one of the master bedroom suites, didn't you?
NISHAD SINGH: The nicest room in the house.
MR. COHEN: And you lived there until you left the Bahamas in November of 2022, correct?
NISHAD SINGH: Correct.
MR. COHEN: Okay. And prior——you told us this yesterday. Prior to November 2022, you were a billionaire.
NISHAD SINGH: So I believed.
MR. COHEN: Okay. Mr. Bankman-Fried was a billionaire.
NISHAD SINGH: So I believed.
MR. COHEN: The other members in the apartment were worth at least millions of dollars, correct?
NISHAD SINGH: So I believed.
MR. COHEN: Would you regard it as really expensive for a group of billionaires and millionaires to live in a $30 million apartment?
NISHAD SINGH: The expense would be the same no matter the wealth of the people living in it.
MR. COHEN: So your view is it was really expensive.
NISHAD SINGH: In absolute terms, yes.
MR. COHEN: What about relative to the wealth of the people living in the apartment?
NISHAD SINGH: I don't really know what's reasonable for billionaires to do. I don't know other billionaires.
MR. COHEN: So you have no view.
NISHAD SINGH: I felt confused about it.
MR. COHEN: Okay. But not confused enough to move out.
NISHAD SINGH: Oh, I considered moving out many times.
MR. COHEN: But you didn't.
NISHAD SINGH: I didn't.
MR. COHEN: Okay. Now I want to move to a different topic, Mr. Singh. Bear with me a moment.
Do you recall yesterday that you told us that you were asked what your role was in the fraud against FTX's customers that you committed with the defendant? Do you recall being asked that question, sir?
NISHAD SINGH: Or something to its effect, yes.
MR. COHEN: Okay. Fair enough.
And you told us that "In September of 2022, I learned of the hole and even after that, implicitly and explicitly, I greenlit transactions that I knew must have been digging the hole deeper and therefore coming from customer funds." Do you recall giving that testimony yesterday?
NISHAD SINGH: Or something to that effect, yes.
MR. COHEN: Okay. So you also testified yesterday that you first learned that customer funds were being deposited, FTX customer funds were being deposited in Alameda bank accounts as early as 2019. Do you recall that, sir?
NISHAD SINGH: Yes.
MR. COHEN: And you gave us an example from 2019 and 2020, correct?
NISHAD SINGH: Sorry. I don't remember which examples I gave, but——
MR. COHEN: That's fine. So I take it you didn't think that was wrong.
NISHAD SINGH: Not at the time.
MR. COHEN: Okay. And then you told us yesterday that——and we'll get to this more in a bit——you told us about a sequence in June, beginning in June 2022, where you were asked to look into certain balances of Alameda. Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. We'll get to that in a minute.
But you also told us that when you first learned about the situation in June, "I thought Alameda had positive balances on FTX, that it was borrowing in lots in some places but that overall they had the money." Do you recall giving us that testimony?
MR. COHEN: I'm setting up the question, your Honor. This is cross-examination.
JUDGE KAPLAN: Mr. Cohen, I understand what's happening in this courtroom, and I don't need that. If you're reading from the transcript, read from the transcript and identify by page and line what you're reading from.
MR. COHEN: I thought I was. Okay. I will, your Honor.
JUDGE KAPLAN: Well, let's proceed that way.
MR. COHEN: Let's go to the transcript. For counsel and the Court's benefit, this is page 1404. You don't have to show it to the witness, but for counsel and the Court, lines 5 through 11.
BY MR. COHEN:
MR. COHEN: "Q. What do you mean?"
"The June exercise, I thought Alameda had positive balances on FTX, that it was borrowing lots in some places but that overall, they had more money than they didn't. This suggested an entirely different reality. I was hoping that I didn't really understand what Gary——what Gary meant by borrowing, but if I did, this was absolutely devastating."
Do you see that, sir? Did you hear that, sir? I'm sorry.
NISHAD SINGH: I hear that.
MR. COHEN: And you gave that testimony yesterday.
NISHAD SINGH: I believe so.
MR. COHEN: All right. So as of June——this is the date that you gave the testimony in——your concern was whether or not Alameda had assets to cover the borrowing.
NISHAD SINGH: I had other concerns as well.
MR. COHEN: In the passage I just read, that was what you told us.
JUDGE KAPLAN: Sustained.
MR. COHEN: Now what were your other concerns in June?
NISHAD SINGH: The exercise showed that there were specific accounts that were extremely negative, like the main account. To be in that position suggested a use of "Allow Negative" that didn't meet the spirit that I expected these privileges to be used in.
MR. COHEN: Okay. And so prior to June of 2022 was it your view that as long as the balances were offset by sufficient assets, the borrowing was appropriate?
NISHAD SINGH: That was not my view.
MR. COHEN: What was your view?
NISHAD SINGH: On what specifically?
MR. COHEN: Prior to June——I understand your testimony about June, and we'll come back to that——did you have a view about whether or not Alameda could borrow provided that the borrowing was supported by assets?
NISHAD SINGH: There were many circumstances in which I thought that would not be appropriate.
MR. COHEN: You didn't think——you didn't think there were circumstances in which it would be appropriate.
JUDGE KAPLAN: Sustained.
MR. COHEN: Mr. Singh, do you recall yesterday you told us you had many meetings with the government?
NISHAD SINGH: Yes.
MR. COHEN: And I think you said you had about 20 such meetings.
NISHAD SINGH: That sounds right.
MR. COHEN: And in those meetings the prosecutors would ask you questions?
NISHAD SINGH: They would.
MR. COHEN: And you would try to answer them the best you could?
NISHAD SINGH: Correct.
MR. COHEN: Okay. Do you recall meeting with them in——well, let me do it this way. Is it fair to say that your first meeting with the prosecutors was in November of 2022?
NISHAD SINGH: I believe that's right.
MR. COHEN: November 21st?
NISHAD SINGH: I don't remember the exact date. Sorry. But I believe that's right.
MR. COHEN: Is it fair to say that you had meetings in November, December, and January——November and December of 2022?
NISHAD SINGH: Yes.
MR. COHEN: And then you had meetings with them again in January, February, and March of the following year?
NISHAD SINGH: Yes.
MR. COHEN: And then you had additional meetings in May and August?
NISHAD SINGH: Sorry. I forget all the exact dates.
MR. COHEN: And you had meetings in September and October.
NISHAD SINGH: Yes.
MR. COHEN: Including a meeting this past week.
NISHAD SINGH: Yes.
MR. COHEN: Do you recall having a meeting with the prosecutors on January 4th of 2023?
NISHAD SINGH: Sorry. I don't remember the specific dates of our meetings.
MR. COHEN: A January meeting.
NISHAD SINGH: I remember meeting in January.
MR. COHEN: Okay. Do you recall telling the prosecutors that to you, the idea of borrowing from anywhere, as long as you were good for it, didn't feel wrong?
NISHAD SINGH: I don't remember saying that.
MR. COHEN: Can we call up 3501-021 just for the witness, please. Page 14.
Okay. If you can go to the last paragraph at the bottom, Brian.
And go to the last two sentences.
MR. COHEN: Mr. Singh, read those to yourself and tell us whether or not they refresh your recollection that you told that to the prosecutors.
NISHAD SINGH: I don't——
JUDGE KAPLAN: What's the form objection?
JUDGE KAPLAN: I'm sorry, what?
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Let me see if we can address the Court's, counsel's issue.
BY MR. COHEN:
MR. COHEN: Mr. Singh, read that to yourself, and does that refresh your recollection about what you said to the prosecutors?
NISHAD SINGH: Yes, but not about the exact topic we're talking about.
MR. COHEN: So it doesn't refresh you about the topic we just discussed.
NISHAD SINGH: About borrowing in general? No. This refreshes me on something specific I thought about bank accounts.
MR. COHEN: Okay. Then let's take that down.
MR. COHEN: When you considered the assets that would be posted as security for the loans, did the nature——did you take into account the nature of the assets?
JUDGE KAPLAN: Sustained.
MR. COHEN: Sure.
MR. COHEN: Coming back to——we were talking about what your thinking was prior to June of 2022. Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. In the period prior to 2022 did you take——in thinking about what was going on at Alameda and whether anything was wrong, did you take into account the nature of the assets that Alameda was posting as collateral?
JUDGE KAPLAN: Sustained.
MR. COHEN: Now your view changed at some point? Or let me ask you a better question. When did you first believe you had done anything wrong?
NISHAD SINGH: I knew that I'd done something wrong when I helped doctor the Serum staking fees revenue.
MR. COHEN: When was that, sir?
NISHAD SINGH: That was December 30th or 31st of 2021.
MR. COHEN: Okay. And coming into the period prior to June, other than the staking fees you just talked about, is there anything else you thought you had done wrong?
NISHAD SINGH: I'm not sure.
MR. COHEN: And then you told us yesterday your view changed in September 2022; is that correct?
NISHAD SINGH: Sorry. On what specifically?
MR. COHEN: About what you had done wrong.
JUDGE KAPLAN: Yes. I don't understand, Mr. Cohen. I thought the witness just said that he first believed that he did something wrong in December——I'm mistaken. Excuse me. You go ahead.
You can re-put the question.
MR. COHEN: Okay.
BY MR. COHEN:
MR. COHEN: I want to understand, to the Court's comment, what you thought in September 2022 was wrong with your conduct.
NISHAD SINGH: My conduct before that point or after that point?
MR. COHEN: Take it in steps. Let's do before first.
NISHAD SINGH: Before that point, I knew that in June, I had observed Alameda borrowing in large amounts in a way that didn't meet the expectations I had and what I'd been told about how Alameda would use things like "Allow Negative." Even in June, when I suspected there was wrongdoing there, I took cues from the people around me and didn't pursue it further.
In September, I understood not only had there been an enormous amount of borrowing but that the money wasn't there at all.
MR. COHEN: Okay. So, all right. We're going to come back to June, we're going to come back to September. I don't want to do them in bits and pieces. Just let me cover another topic quickly.
Do you recall that yesterday counsel asked you questions about your compensation while you worked for FTX?
NISHAD SINGH: Yes.
MR. COHEN: And I believe you told us that you made a salary of about 200,000?
NISHAD SINGH: Yes.
MR. COHEN: And that you'd receive cash bonuses around 1 to 2 million; is that correct?
NISHAD SINGH: I think that's right.
MR. COHEN: Now you also received loans from FTX, correct?
NISHAD SINGH: Many.
MR. COHEN: And you touched on a loan yesterday, but I'd like to go over it with you in a bit more detail, sir. Let me just give you the foundation.
Is it fair to say that at a certain point you borrowed 477 million from FTX?
NISHAD SINGH: In a sense.
MR. COHEN: In a sense. And this was to purchase options?
NISHAD SINGH: Yes.
MR. COHEN: Shares in FTX?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And it was to buy more equity in FTX, correct?
NISHAD SINGH: To buy my first equity in FTX.
MR. COHEN: Okay. And you said that one of the reasons you were looking to do this was you wanted to donate the money to charity.
NISHAD SINGH: Right.
MR. COHEN: Did you end up doing that?
NISHAD SINGH: No.
MR. COHEN: Okay. And you said that there were taxes used with regard to how it was to be structured, correct?
NISHAD SINGH: The reason I believe——
MR. COHEN: I'm sorry. Let me ask a better question, sir. The "this" being how the loans would be structured.
NISHAD SINGH: The reason it was structured this way was so that there was a smaller outlay of cash from Alameda, with the tradeoff being that I took on a large debt.
MR. COHEN: Okay. And you just answer this yes or no, sir. You consulted with attorneys about how to structure this loan, correct?
NISHAD SINGH: Yes.
MR. COHEN: Okay. I believe you mentioned Dan Friedberg; is that correct?
JUDGE KAPLAN: Well, Mr. Cohen, it's not clear whether you're asking whether he did that in connection with this or whether he ever consulted Dan Friedberg about anything.
MR. COHEN: I meant in this, your Honor.
MR. COHEN: Who were the lawyers you consulted with about this $477 million loan?
NISHAD SINGH: Can Sun; Joe Bankman; two of Sam's personal tax lawyers, David Forst, Sean McElroy, and others.
MR. COHEN: Where did David Forst and Sean McElroy work, if you know?
NISHAD SINGH: I don't know. I think Fenwick & West but I'm not sure.
MR. COHEN: Fenwick & West was an outside law firm?
NISHAD SINGH: Yes.
MR. COHEN: And Can, C-A-N, Sun was the general counsel of FTX, correct?
NISHAD SINGH: Yes.
MR. COHEN: Now documentation was prepared for that loan, correct?
NISHAD SINGH: Yes.
MR. COHEN: And you signed that documentation.
NISHAD SINGH: Yes.
MR. COHEN: Now you also——did you also receive a loan for $10 million?
NISHAD SINGH: I did.
MR. COHEN: And that was for funds you wanted to provide to your parents, correct?
NISHAD SINGH: Family and friends.
MR. COHEN: Okay. Family and friends. And that loan was in 2021, correct?
NISHAD SINGH: Yes, I believe early 2021.
MR. COHEN: And that was money you borrowed from FTX in order to pay to family members.
NISHAD SINGH: Not quite.
MR. COHEN: Was it money you borrowed from FTX?
NISHAD SINGH: No.
MR. COHEN: You didn't borrow it.
NISHAD SINGH: I did borrow it.
MR. COHEN: Okay. So——
NISHAD SINGH: Sorry. To be clear——
MR. COHEN: Let me try, Mr. Singh. Did you borrow $10 million from FTX?
NISHAD SINGH: No.
MR. COHEN: No. How did it get to you?
NISHAD SINGH: Sam gave it to me.
MR. COHEN: Sam gave it to you from——through FTX?
NISHAD SINGH: I don't think so.
MR. COHEN: Okay. And those were funds that were used to pay for your family-related expenses.
NISHAD SINGH: They were gifts to family and friends, and some amount was donated.
MR. COHEN: Okay. Why don't we now move to another topic, Mr. Singh. And let's talk about June, June of 2022.
Well, I think we have to go back a little bit. Do you recall giving testimony yesterday about a bug in the fiat@ account system?
NISHAD SINGH: I do.
MR. COHEN: And without getting too technical, the effect of this bug was to make it look like Alameda's balances were more negative than they really were, or that——let me rephrase——that Alameda owed more money to FTX than it really did?
NISHAD SINGH: The effect of the bug was that the fiat@ftx.com's stated balance was more negative than the——than what it should have actually been, and Alameda was consuming this balance and treating it as something that they were on the hook for, as I understood, and so Alameda overestimated how much they should have had in bank accounts to back customer deposits.
MR. COHEN: So the net of it was Alameda overestimated the amount it owed to——back to FTX.
NISHAD SINGH: Yes.
MR. COHEN: And I believe you told us yesterday that you first became aware of the bug in 2021.
NISHAD SINGH: I think either November or December of '21.
MR. COHEN: And tell us again how you first learned of it.
NISHAD SINGH: It was in the Bahamas office. It was late at night. Gary and Adam sat a few desks away from me, and I overheard them talking about the bug.
MR. COHEN: Okay. And what did you overhear?
NISHAD SINGH: I think Gary was explaining that it existed. Adam was worried. Gary assured that the direction of the bug was safe, that Alameda overestimated, not underestimated how much it should keep in banks.
MR. COHEN: Okay. Did they discuss——did they go over how big the bug was at that time?
NISHAD SINGH: I can't remember if they did. I remember asking for details, and at some point I had an understanding of the size——
MR. COHEN: I'm just asking about the conversation with Gary and Adam. We'll get to the rest in a bit. Can you try——can we try again, Mr. Singh.
NISHAD SINGH: I can't remember if they said the size of the bug.
MR. COHEN: Okay. And you mentioned that Gary said it was in a safe direction. What did you understand that to mean?
NISHAD SINGH: That Alameda believed because of the bug that they should be custodying more, not less cash than they actually needed to for customers.
MR. COHEN: So it was safe from the FTX point of view.
NISHAD SINGH: Yes.
MR. COHEN: Okay. Do you remember how, if at all, Mr. Wang and Mr. Yedidia reacted to this?
NISHAD SINGH: Adam was worried.
MR. COHEN: I'm sorry?
NISHAD SINGH: Adam Yedidia was worried about it. After Gary gave his explanation, he seemed relaxed.
MR. COHEN: Isn't it true that Gary joked about the bug?
NISHAD SINGH: Yes. I think that's right.
MR. COHEN: He thought it was funny, correct?
JUDGE KAPLAN: Sustained.
MR. COHEN: He seemed relaxed about it, you said.
JUDGE KAPLAN: Sustained.
He said Adam seemed relaxed.
MR. COHEN: I don't think that was the testimony, your Honor, but I'll ask again.
MR. COHEN: What was Gary's reaction?
JUDGE KAPLAN: Sustained.
And you're right, Mr. Cohen, he did say Gary.
MR. COHEN: So then I don't need to go back since it's already in the record.
JUDGE KAPLAN: You don't need to go back.
MR. COHEN: Then I won't. Okay.
(Continued on next page)
MR. COHEN: Did you have any reaction at the time, Mr. Singh, of this conversation?
NISHAD SINGH: I did.
MR. COHEN: What was your reaction?
NISHAD SINGH: I shared Adam's worry. After Gary explained that it was safe, I asked Gary if Alameda is in fact tracking this number. Gary said he's pretty sure but that it wouldn't hurt for me to confirm. I asked Caroline if they were. Caroline said they were.
MR. COHEN: Let's move forward then to June of 2022 now, sir.
I believe you told us you had a communication with Caroline Ellison about Alameda's net asset value being close to zero.
Do you recall telling us about that yesterday?
NISHAD SINGH: Sorry. I don't.
MR. COHEN: Do you recall speaking with Caroline Ellison at all in June of 2022?
NISHAD SINGH: Yes.
MR. COHEN: By speak, just to be clear, I mean either orally or over Signal or Slack or so forth.
NISHAD SINGH: That's how I interpreted it, yes.
MR. COHEN: What was the gist of the conversation about the state of Alameda's net asset value?
JUDGE KAPLAN: Why isn't it, Mr. Cohen?
MR. COHEN: It goes to the effect on the listener, your Honor.
JUDGE KAPLAN: That's relevant why?
MR. COHEN: Because we are talking about the state of mind of one of the coconspirators or the alleged coconspirators.
JUDGE KAPLAN: Mr. Roos.
JUDGE KAPLAN: Overruled.
MR. COHEN: Can we have the question read back?
JUDGE KAPLAN: Sure.
(Record read)
NISHAD SINGH: The conversation I remember was the one in which Caroline sent the spreadsheet that we talked about yesterday. I don't recall parts of this conversation referencing that Alameda's NAV was zero.
MR. COHEN: Do you recall anything with Ms. Ellison about what the state of Alameda was in terms of its solvency?
NISHAD SINGH: In June?
MR. COHEN: Um-hum.
NISHAD SINGH: No.
MR. COHEN: Let's move forward because I think you covered a number of different sequences with respect to June and I want to make sure I understand them, sir.
Can you please tell us, as best you can, who you spoke with about this bug in June.
NISHAD SINGH: You would like me to list the people?
MR. COHEN: I would like you to list the sequence, to the extent you can.
NISHAD SINGH: Sure. Tell me if I'm -- if my answer --
MR. COHEN: Do your best, sir.
NISHAD SINGH: Caroline sent a spreadsheet, I think a Google Sheet, that contained a list of accounts labeled as if they were from Alameda's pointer system, so Alameda's nomenclature and the total value held in each. These were accounts that Alameda owned on FTX, things like the fiat account and their trading account. They showed some extremely large negative number when considered together.
MR. COHEN: If I could stop you for a moment, sir. Who did she send that to, the Google Sheet that you referred to?
NISHAD SINGH: I know that she sent it to me, Sam, and Gary. I don't know if she also sent it to other people.
MR. COHEN: Was this on one Signal communication?
NISHAD SINGH: I don't remember.
MR. COHEN: Are you sure she sent it to you, Sam, and Gary?
JUDGE KAPLAN: Overruled.
NISHAD SINGH: I am sure that the four of us got on a Google Meet and worked on like investigating it. I am not sure that she only sent it to the four of us.
MR. COHEN: Let's continue with the sequence, sir.
NISHAD SINGH: Sure. Sam sees the spreadsheet and said something to the effect of, this can't be right. There has got to be a bug. Let's look into it.
MR. COHEN: This was in a different Signal or the same Signal?
NISHAD SINGH: I can't recall. Sorry.
MR. COHEN: Keep going.
NISHAD SINGH: I asked Gary how I could help. Gary told me that I could try my best to identify the accounts in the FTX database that either belonged to Alameda explicitly or morally, morally meaning that in the end there were things that Sam was responsible for.
I took a stab. My stab was ignored. Gary took a stab. I added a column to add notes for which elements of Gary's list -- which items Gary had pulled that I thought weren't actually belonging to Alameda. And then I recall Gary pointed out the bug. He calculated the bug.
MR. COHEN: If I can stop you for a moment, sir.
These conversations you have just been going through for us, were they all over Signal or Slack, or any of them in person?
NISHAD SINGH: A number of it was over Google Meet, like done orally.
MR. COHEN: Were there any that were in person?
NISHAD SINGH: I think Gary was next to me in the office, but I don't recall for sure. Sam may have been. I don't think Caroline was next to me.
MR. COHEN: So you don't recall Caroline being there in person?
NISHAD SINGH: Not for this.
MR. COHEN: You are not sure if Sam was there in person?
NISHAD SINGH: Correct.
MR. COHEN: Keep going.
NISHAD SINGH: Gary identified the bug and calculated its effect size, which was around $8 billion. Caroline posted a screenshot of the graph that she had created that showed two things. One was Alameda's unexpected balance breaks over time or unexplained balance breaks, which I understood to mean something like unexplained changes in the balances that they were fetching, things that they couldn't reconcile against records of trades or withdrawals.
And then she posted the effect size, I think, that either Gary or I had given her of the bug over time. These charts showed two lines that were largely parallel, implying that this bug explained at least a large portion of what was unexplained in Alameda's observed balance breaks.
MR. COHEN: If I could stop you there for a moment, Mr. Singh.
You used a couple of phrases I just want to go over. You used a phrase called balance break. What did you mean by that?
NISHAD SINGH: Balances in a trading system change over time. There are also transactions that can explain those changes. If you infer just from the transactions that you received what balances would result from them and you compare them against the actual balances that you are retrieving and fetching live, sometimes there is a difference because you might be missing records or you might be misinterpreting records. That difference is a break.
MR. COHEN: In this situation was the break the size of the bug, the effect of the bug?
NISHAD SINGH: I don't think it was exactly. I recall that this chart Caroline showed suggested that a large fraction of it was explained by the bug.
MR. COHEN: Do you recall, when you first spoke -- you overheard Gary and Adam Yedidia at the end of 2021 talk about the bug, whether the topic of a break came up?
NISHAD SINGH: I don't recall.
MR. COHEN: Now, when you learned that the break was $8 billion, were you surprised?
NISHAD SINGH: Yes.
MR. COHEN: Were you surprised that it had not been tracked?
NISHAD SINGH: I was surprised -- no, not exactly.
MR. COHEN: Didn't you just tell us that Gary assured you it was being tracked by Ms. Ellison and others?
NISHAD SINGH: Gary believed that it was being tracked. Caroline assured me that it was being tracked.
MR. COHEN: So Gary's belief was incorrect?
JUDGE KAPLAN: I think the witness can handle that question.
NISHAD SINGH: No. Gary wasn't incorrect.
MR. COHEN: What about Caroline?
NISHAD SINGH: Caroline wasn't incorrect.
MR. COHEN: So it hadn't been tracked?
JUDGE KAPLAN: Sustained.
MR. COHEN: Let me go back to your answer because I want to make it a little more focused. When you answered about what was being tracked, were you referring to the balances in the fiat@ account or the effect of the bug or, I guess, both?
NISHAD SINGH: Just the balances in the fiat account.
MR. COHEN: Based on your interaction with the work you did in June, did you have a view about whether those balances had been tracked prior to June?
JUDGE KAPLAN: Sustained. Form at least.
MR. COHEN: The topic of the break come up?
NISHAD SINGH: Sorry. When?
MR. COHEN: About whether the break had been tracked since the end of the prior year that had come on.
MR. COHEN: Since 2021.
JUDGE KAPLAN: I don't understand what counsel means by the break at this point.
MR. COHEN: The bug. The size of the bug.
NISHAD SINGH: Sorry. Your question -- could you repeat the question?
MR. COHEN: Sure.
Let me ask it this way. Mr. Singh, did you ever track the bug, size of the bug or its effect, prior to June 2022?
NISHAD SINGH: Not prior to June 2022 that I recall.
MR. COHEN: Based on your interactions with others at Alameda and FTX, do you think anyone else did?
JUDGE KAPLAN: Sustained.
If I understand what you said, Mr. Singh, Gary told you that he thought the size of the overstatement was being tracked. Caroline subsequently assured you that that was so. Is that right so far?
NISHAD SINGH: That's not quite right.
JUDGE KAPLAN: Then correct me, please.
NISHAD SINGH: Gary assured me that the full balance, not separately the size of the error, was being tracked. Gary assured me that the fiat@FTX.com balance, which included the bug, was being tracked. Caroline assured me it was. I don't think anybody told me that the size of the bug was being tracked over time.
JUDGE KAPLAN: I said the size of the overstatement, not the size of the bug, Mr. Singh.
The bug was an error in the computer code, right?
NISHAD SINGH: Correct.
JUDGE KAPLAN: And it had an effect, right?
NISHAD SINGH: Correct.
JUDGE KAPLAN: The effect was to overstate the amount owed by Alameda to FTX, correct?
NISHAD SINGH: Correct.
JUDGE KAPLAN: Please, Mr. Cohen, take it from there.
MR. COHEN: Can we have just the last exchange with his Honor read back, please?
JUDGE KAPLAN: Yup. I think his Honor may have asked that question. I just want to hear it again.
(Record read)
MR. COHEN: I think his Honor has covered it.
MR. COHEN: Very quickly, Mr. Singh, the fiat account was tracked, not the amount of the bug?
NISHAD SINGH: Not the size of the error as a result of the bug.
MR. COHEN: I am going to ask you to complete the sequence, but before you do that, you used a phrase called morally responsible for certain amounts. What did you mean by that?
NISHAD SINGH: There are some accounts in the FTX system that are explicitly under Alameda's name, things like info@AlamedaResearch.com. There are other accounts, like Project Serum accounts, that on their face don't belong to Alameda Research but that I understood, in the end, Sam beneficially owned. Those accounts would be morally but not explicitly owned by Alameda or Sam, so those were to be included inside of this calculation.
MR. COHEN: Meaning in the event that they were needed, you understood that Sam would make use of those assets for Alameda?
NISHAD SINGH: Really just that they fell under the large umbrella of things that Sam controlled, which was not just Alameda.
MR. COHEN: But you considered it in connection with considering the assets of Alameda?
NISHAD SINGH: I was told to pull those balances.
MR. COHEN: And you pulled them?
NISHAD SINGH: Gary ended up pulling them.
MR. COHEN: Why don't we complete the sequence, sir.
JUDGE KAPLAN: I think it's a little hard to start in the middle of the ocean at this point. Try to pin it down.
MR. COHEN: You told us, Mr. Singh, about communications you had with Gary, Sam, and Caroline over communications about addressing the impact of the bug. Can you tell us what happened next.
NISHAD SINGH: Gary identified -- I think I may have said this. Forgive me if I'm repeating myself. Gary had identified the bug. He identified its effect size as of the current date then, so as of the date we were doing the exercise. Caroline demonstrated that this bug explained a lot of what had been unexplained in Alameda's observed balance breaks.
I believe I asked -- said I thought this was fixed in November. I don't remember if I got a response, but it's a silly question. It hadn't been fixed. I don't recall everything that happened after that.
The next thing I do recall is sensing from others a palpable sense of relief and even celebration. Sam made a joke or sort of like comment on how it was amazing that such a large balance break could be explained just by a single thing, a single bug.
MR. COHEN: We have now talked -- everything you just told us about the bug took place in June and July of 2022.
NISHAD SINGH: I think everything I just described now was on a single day, like a single -- in a single hour over Google Meet or something.
MR. COHEN: It's a series of communications over Google Meet?
NISHAD SINGH: One Google Meet, one long discussion over Google Meet.
MR. COHEN: With potentially some in-person communications as well?
NISHAD SINGH: Yeah.
MR. COHEN: Do you believe you are clear on the sequence of what happened?
NISHAD SINGH: I don't think I remember everything about it.
MR. COHEN: But on what you just told us, you believe you are clear on that, correct?
NISHAD SINGH: I'm stating the sequence the best to the best of my ability.
MR. COHEN: Now, we talked about the 20 interviews you've had with the prosecutors, correct, sir?
NISHAD SINGH: Correct.
MR. COHEN: Do you recall speaking with them in January of this past year, January 4?
NISHAD SINGH: I don't recall the specific date, but I do think I met with them in January.
MR. COHEN: And at that point you had already had many meetings with them, correct?
NISHAD SINGH: Yeah. I had had more than one.
MR. COHEN: Does it refresh you that you had more than five?
NISHAD SINGH: I would believe it.
MR. COHEN: Fair enough. And you had gone over the topic of what happened in June with them, correct?
NISHAD SINGH: I think so.
MR. COHEN: Isn't it fair to say that you told the prosecutors that you had a surprising amount of haziness when trying to recall events in June and July of 2022?
NISHAD SINGH: I don't remember saying those exact words, but I did acknowledge that there was a lot that I -- there was a lot that I didn't remember the details around from that time.
MR. COHEN: In particular as to June and July of 2022.
NISHAD SINGH: I don't know if I said specifically those dates or months.
MR. COHEN: Why don't we call up for the witness only 3501-021, page 17.
Brian, if you could go to the second-to-last paragraph and call it out, pull it up.
MR. COHEN: Mr. Singh, take a moment and read this to yourself. The question is whether it refreshes your recollection as to what you told the prosecutors about your haziness in the meeting with them on January 4, 2023.
NISHAD SINGH: Sorry. Could you repeat the ask again?
MR. COHEN: Sure. This is whether or not it refreshes your recollection as to what you told prosecutors about your surprising amount of haziness in 2020 in June and July of 2022. Yes or no, does it refresh your recollection?
NISHAD SINGH: I still don't remember having said it specifically about June or July of 2022, but I could believe that I did.
MR. COHEN: We can take that down.
JUDGE KAPLAN: The question was, does it refresh your recollection, not whether you could believe that you did.
NISHAD SINGH: Fair point. The transcript or, I guess, the notes themselves don't actually refresh my recollection. I do separately remember --
JUDGE KAPLAN: You've answered the question.
Could we move on.
MR. COHEN: Yes, your Honor.
MR. COHEN: Let's continue with what happened in June.
Do you recall telling us, Mr. Singh, that after the discussions we have already covered there was a discussion about fixing the bug?
NISHAD SINGH: Forgive me. I missed I think part of your sentence, but I do remember there being discussions about fixing the bug.
MR. COHEN: Just to remind us, what were those conversations about?
JUDGE KAPLAN: I imagine they were about fixing the bug. Isn't that what the point was?
MR. COHEN: It did occur to me, your Honor.
JUDGE KAPLAN: Good.
MR. COHEN: Who was tasked with fixing the bug?
NISHAD SINGH: I wasn't involved in the project, so I don't know who was tasked with it. I do know that Gary and Adam worked on it.
MR. COHEN: Was a document created to document what had happened with the bug fix?
NISHAD SINGH: Adam wrote one.
MR. COHEN: Did you ever hear the term a postmortem document?
NISHAD SINGH: Yes.
MR. COHEN: What did that refer to in this context?
NISHAD SINGH: A document describing an error or like a bug and the sequence of steps taken to address it and lessons to take.
MR. COHEN: And did you have occasion to review the postmortem relating to the bug that Adam prepared?
NISHAD SINGH: I don't think that I read it in its entirety. I did talk with Adam about it.
MR. COHEN: Did you think that the fix had been done properly?
NISHAD SINGH: Yes.
MR. COHEN: And the postmortem referred to the fix of the $8 billion bug, correct?
NISHAD SINGH: And other considerations around it.
MR. COHEN: Such as?
NISHAD SINGH: There were identifying the exact size of the bug, had some complicated elements. Adam walked through a lot of the considerations that he and Gary had sort of thought through. Beyond talking about the fix for the bug, it talked about the mechanical process that they took to ensure it wouldn't happen again and ensure a safe migration.
MR. COHEN: So the technical issues that had been involved in fixing the bug and making sure it wouldn't happen again?
NISHAD SINGH: Yes.
MR. COHEN: Did you think this was an appropriate thing for Gary and Adam to be doing?
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you have a view about whether or not this memorandum should have been prepared?
JUDGE KAPLAN: Sustained.
MR. COHEN: Let's move on, Mr. Singh.
You mentioned yesterday that there came a time when there was an attempt to split out the balance of the fiat@ account from Alameda and FTX.
Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: And when in relation to the bug fix was this?
NISHAD SINGH: I believe it was after.
MR. COHEN: Was it after the memo we just discussed?
NISHAD SINGH: I believe so, but I am not 100 percent certain.
MR. COHEN: Can you describe for us what steps were taken to split out the balances.
JUDGE KAPLAN: Sustained.
MR. COHEN: Were you involved with this at all, Mr. Singh?
NISHAD SINGH: No.
MR. COHEN: Did you come to learn of it?
NISHAD SINGH: I came to learn that the exercise had been done.
MR. COHEN: Did you learn the outcome of the exercise?
NISHAD SINGH: Some parts of it, yes.
MR. COHEN: Tell us what you learned.
NISHAD SINGH: I learned that there had been an account, a new subaccount called FTX fiat old made under the info@AlamedaResearch.com main account, and that it now reflected the amounts owed by Alameda to FTX and that fiat@FTX.com now reflected the amounts that FTX owed to FTX.
MR. COHEN: Are you done with your answer?
NISHAD SINGH: I am.
MR. COHEN: Did you have an understanding of the purpose of the FTX underscore fiat underscore old account?
NISHAD SINGH: I inferred it.
MR. COHEN: What did you infer?
JUDGE KAPLAN: Ground.
JUDGE KAPLAN: What's the relevance?
MR. COHEN: The relevance is we heard about this sequence yesterday in a way designed to suggest it was done in secret and designed to keep this account from everyone.
MR. COHEN: I'm entitled to explore it.
JUDGE KAPLAN: The objection is withdrawn.
MR. COHEN: Can we have the question back, please.
JUDGE KAPLAN: Yes, of course.
(Record read)
NISHAD SINGH: I inferred that it was made and separated from fiat@FTX.com to track the correct amount that Alameda owed FTX in customer fiat deposits.
MR. COHEN: To track it, correct?
NISHAD SINGH: Correct.
MR. COHEN: Then there came a time when that account was moved again, correct?
NISHAD SINGH: Yes.
MR. COHEN: And I believe you told us about -- I am going to pronounce this incorrectly I'm sure -- the Seoyun account.
Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: Do you have any involvement with that?
NISHAD SINGH: I moved the subaccount to this Seoyun account.
MR. COHEN: You were the person who moved the account from FTX old to Seoyun?
NISHAD SINGH: I either moved it or I asked Andrea to move it. Either way, I directed it.
MR. COHEN: For record purposes Andrea is Andrea Lincoln?
NISHAD SINGH: Correct.
MR. COHEN: Who worked with Adam and Gary, correct?
NISHAD SINGH: Right.
MR. COHEN: What was your purpose for moving it?
NISHAD SINGH: I was told to.
MR. COHEN: Who told you?
NISHAD SINGH: Sam told me to move it and a trader told me where I should move it to, such that it was still tracked.
MR. COHEN: I believe you referred yesterday to -- the trader was Terence Choo, is that correct?
NISHAD SINGH: I think it was Terence Choo, but there is some chance it was Caroline Ellison.
MR. COHEN: Both Caroline and Terence worked for Alameda, correct?
NISHAD SINGH: Correct.
MR. COHEN: In the trading group at Alameda.
NISHAD SINGH: That's my understanding.
MR. COHEN: They advised you where to move the account, correct?
NISHAD SINGH: They did.
MR. COHEN: Did you know why -- withdrawn.
Did the topic of why this account, as opposed to another one, came up?
NISHAD SINGH: In that I specified the parameters that I viewed as important. I specified that it shouldn't be under one of the accounts that was in consideration for how much Alameda was charged line-of-interest fees on. And I asked what is another account that you guys are tracking that isn't in that set.
MR. COHEN: And they provided you with the account?
NISHAD SINGH: Yes.
MR. COHEN: Your Honor, this might be a good time for our morning break.
JUDGE KAPLAN: OK. 11:15, folks.
(Recess)
JUDGE KAPLAN: The record will reflect that the defendant and the jurors all are present, as they have been throughout.
The witness is reminded he is still under oath.
Mr. Cohen, you may proceed when you are ready.
MR. COHEN: Thank you, your Honor.
MR. COHEN: New topic, Mr. Singh.
I want to go back. Counsel covered with you some questions about certain of the code base features.
Do you recall your testimony about that yesterday?
NISHAD SINGH: Forgive me. I don't know what you mean by counsel.
MR. COHEN: I mean Mr. Roos. I'm sorry.
NISHAD SINGH: I recall talking about code changes.
MR. COHEN: Let me start with allow negative. My first question is a when question. When did you first learn about the allow-negative feature?
NISHAD SINGH: July 2019.
MR. COHEN: How did you learn about that?
NISHAD SINGH: I was told to write it. I did.
MR. COHEN: So you were the person who put it together?
NISHAD SINGH: In some sense, I wrote the code, but I was sort of given pretty clear and explicit instructions from others.
MR. COHEN: When you wrote it in 2019, what was the purpose of the code?
NISHAD SINGH: It was to facilitate FTX admins moving FTT from designated accounts or making trades in FTT from designated accounts and to modernize an existing set of features that would allow accounting-oriented accounts to go negative.
MR. COHEN: Was this at all in connection with market-making functions?
NISHAD SINGH: I am not sure.
MR. COHEN: Did there come a time that you came to believe that the allow-negative feature was used in connection with market-making functions?
NISHAD SINGH: Yes.
MR. COHEN: When was that, sir?
NISHAD SINGH: I don't know precisely.
MR. COHEN: Approximately is fine.
NISHAD SINGH: 2020.
MR. COHEN: How did you learn of that?
NISHAD SINGH: I remember a conversation I had with Gary Wang in which I was thinking about making some changes to some code related to OTC trades, and I noticed that Alameda was the only provider --
MR. COHEN: Could I interrupt you for a moment, sir. Can you tell the jury what OTC trades are.
NISHAD SINGH: Over the counter. I don't think that does a great job describing it. If I may.
MR. COHEN: Does it mean not on the exchange?
NISHAD SINGH: No.
MR. COHEN: Tell us what you are thinking.
NISHAD SINGH: It means not on an order book. So a customer could basically request -- just say I want to buy one Bitcoin. Tell me how many dollars that takes. They get back an answer. They have some time before they have to accept -- before they can -- before that sort of quote expires. They can say I accept and it happens. This is different from submitting an order on an order book.
MR. COHEN: Please continue.
JUDGE KAPLAN: Sustained. Ask a more specific question, please.
MR. COHEN: Sure.
MR. COHEN: You were describing for us how you came to the understanding of a connection, if any, between allow negative and market making.
NISHAD SINGH: As a part.
MR. ROOS: Objection. I don't think there was a question. He was just describing what the witness was testifying to.
JUDGE KAPLAN: Yes. I agree.
MR. COHEN: Could you tell us the basis for coming to the view, if you did, that there was a connection between the allow-negative code and market making?
NISHAD SINGH: I am describing only one instance. There may have been others. Is that OK?
MR. COHEN: Yup.
NISHAD SINGH: I was thinking about making some change, I can't recall what, to the code related to these OTC trades. I noticed that the balances of the provider, Alameda, weren't checked when accepting an OTC trade, meaning that if Alameda didn't have funds that would otherwise be necessary for making the trade, it could go through anyway.
I asked Gary about this. This is a reflection of allow negative. And he described to me the type of situation where this seems like the right thing for the exchange to do.
MR. COHEN: Which was what?
NISHAD SINGH: I don't know if he gave this precise example, but one comes to mind.
JUDGE KAPLAN: Could we stick to what actually happened instead of what you think now.
NISHAD SINGH: Fair enough. A. He gave an example. I can't remember the exact example. It seemed valid to me.
MR. COHEN: Let me ask you this, Mr. Singh. As a result of the allow-negative feature, was Alameda allowed to sell tokens it didn't have at the time?
NISHAD SINGH: In some ways. But I have since discovered that that was -- allow negative was actually not the section of code proximately responsible for that.
MR. COHEN: But at the time, meaning 2019 and 2020, that's what you believed?
JUDGE KAPLAN: Sorry. What is what he believed?
MR. COHEN: That the allow negative allowed Alameda to sell coins it did not yet own.
NISHAD SINGH: I don't know that I thought about it in 2019 and 2020. I expect that I was told that or thought about it in 2021 and certainly at least in one instance in 2022.
MR. COHEN: In 2019, 2020, when you were working on the code, did you have a view about whether it permitted Alameda to purchase newly issued tokens?
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you ever have a view about -- let me back up.
Did you participate, Mr. Singh -- let me back up.
Do you have an understanding of what it is to issue a token?
NISHAD SINGH: I have some understanding.
MR. COHEN: Why don't you tell us that.
NISHAD SINGH: I am not sure I know that I am talking about what you are. Can you specify a little more what you mean?
MR. COHEN: Sure. Do exchanges sometimes issue tokens?
NISHAD SINGH: Can you specify even further?
MR. COHEN: For example, Binance issued BNB. Are you familiar with that?
NISHAD SINGH: Yes.
MR. COHEN: And if Binance was issuing BNB or some similar token and a customer on Alameda wanted to buy at the issuance, would they be able to?
JUDGE KAPLAN: Yes. I think you have to lay a foundation for that.
MR. COHEN: Based on your experience as the author of the allow-negative feature in the code, are you familiar with whether those features had anything to do with Alameda's ability to buy newly issued tokens?
NISHAD SINGH: At the time I wrote the feature, I don't think I had anything relating to buying tokens.
MR. COHEN: I meant selling tokens.
NISHAD SINGH: Even that. That was not the purpose that I was told it was made for.
MR. COHEN: We talked yesterday about stablecoins.
Do you recall that, sir?
NISHAD SINGH: Yes.
MR. COHEN: In your experience as the author of the allow-negative feature, did it have any impact on Alameda's ability to purchase stablecoins?
NISHAD SINGH: No.
MR. COHEN: Did it have any impact on stablecoins at all?
JUDGE KAPLAN: Overruled.
NISHAD SINGH: The feature changed nothing about Alameda's interaction with stablecoins.
MR. COHEN: Did it have any effect at all?
JUDGE KAPLAN: Asked and answered.
MR. COHEN: Let me ask you this, Mr. Singh. It is going to take me a moment to pronounce this. Have you ever heard of a term called auto de-leveraging event?
NISHAD SINGH: Yes.
MR. COHEN: What's that?
NISHAD SINGH: It may take me a moment to explain. Is that OK?
MR. COHEN: That's fine.
NISHAD SINGH: In the context of FTX, some liquidations were performed off market, which is to say an account that didn't have sufficient collateral to support its positions would enter liquidation. And, if it was getting close enough to being under water, those positions would be closed out or traded against designated backstop liquidity providers, as opposed to selling those positions in the market so it can be done more quickly.
Those backstop liquidity providers could continue to absorb these trades, as in act as the counterparty to these liquidations, so long as they met a few conditions.
If those conditions weren't met for any backstop liquidity providers for a given liquidation instance, then FTX enacted auto de-leveraging. This is not code I wrote, so I'm not super familiar, but my understanding of what this is is that it's essentially like picking other users that have not explicitly opted in being backstop liquidity providers to perform the same role for the sake of that liquidation.
(Continued on next page)
BY MR. COHEN:
MR. COHEN: Let me see if I can just break this down.
You said that this situation arose when an account was in danger or at risk of being closed out. Can you explain what you mean by that.
NISHAD SINGH: Accounts were liquidated, under some circumstances; some liquidations could result in ADL events.
MR. COHEN: Okay. And by closed out, is this what we were talking about——well, let me rephrase.
This means a customer has a position in an account and a certain amount of collateral and the value of the position starts to fall sufficiently that the——that that——actually, I forgot to ask you one more thing.
Have you ever heard the term "risk engine"?
NISHAD SINGH: Yeah.
MR. COHEN: Okay. Did FTX have a risk engine?
NISHAD SINGH: Yeah.
MR. COHEN: How did that——what was that?
NISHAD SINGH: A lot of things that went into it, I suppose. Do you mind clarifying some more.
MR. COHEN: Did the risk engine have anything to do with closing out positions?
NISHAD SINGH: Right. Liquidations were a part of the risk engine.
MR. COHEN: Okay. And so if the risk engine, which was basically computer run, noticed that an account was going below its collateral limit, it would step in and liquidate that account, correct?
NISHAD SINGH: That's almost right. If it noticed that it had insufficient collateral to support its positions. There was not a collateral limit at play.
MR. COHEN: So it would go into the customer's account and sell the positions to get it back in balance, correct?
NISHAD SINGH: That's not exactly how I'd put it.
MR. COHEN: How would you put it, sir?
NISHAD SINGH: That the liquidation engine would sell, or buy, close out their positions, because the customer could be long or short.
MR. COHEN: Okay. And then you referenced something called a backstop liquidity provider. What was that?
NISHAD SINGH: Designated accounts were used as the counterparties for some of the trades that were required to close out these positions.
MR. COHEN: And was Alameda a backstop liquidity provider?
NISHAD SINGH: It was.
MR. COHEN: Were other entities backstop liquidity providers?
NISHAD SINGH: Over time there were many.
MR. COHEN: So if the engine was closing out an individual customer's account and there weren't sufficient assets, the backstop liquidity provider would step in, correct?
NISHAD SINGH: It didn't depend on if there were insufficient assets. The customer would be getting liquidated because they had insufficient assets.
MR. COHEN: And if that were the case, then the backstop liquidity provider would step in.
NISHAD SINGH: Right, under some further conditions.
MR. COHEN: Okay. And what would happen if the backstop liquidity providers didn't themselves have sufficient collateral?
NISHAD SINGH: If none of them did——this would be one criterion for eligibility of a backstop to match against this liquidation. If there were no such eligible backstop liquidity providers, then the system would perform ADLs, or auto-deleveraging fills.
MR. COHEN: What did that mean?
NISHAD SINGH: It meant——this area I'm a little uncertain about because I didn't write the code, but I believe it's that it selected other customers to perform the same role that the backstop liquidity providers would have, and serve as counterparties to the liquidation trade.
MR. COHEN: Okay. So if customer A had an account that was going into liquidity——liquidation and that account had insufficient assets, the next stage would be the backstop liquidity providers, correct?
NISHAD SINGH: Sorry. Could you repeat that.
MR. COHEN: Sure. If the——I want to see if we can make this a little bit more concrete for the jury.
So if customer A had an account that was being liquidated and had insufficient assets, I believe you told us the next step would be to take it the level of the backstop liquidity providers.
NISHAD SINGH: It's getting liquidated because it has insufficient assets.
MR. COHEN: Correct.
NISHAD SINGH: So in getting liquidated, it may go and get——it may enter a mode in which it will be liquidated against backstop liquidity providers.
MR. COHEN: Correct. And then I think you told us that if they, the backstop liquidity providers, had insufficient assets, we'd have an auto-deleveraging event?
NISHAD SINGH: There were multiple conditions that could lead to a backstop being ineligible. One of them is that they had insufficient assets. If that——if those conditions are met for all backstop liquidity providers, then the system would enact ADLs.
MR. COHEN: And that would mean the in——the account would be covered by the assets of other customers on the exchange.
NISHAD SINGH: Not quite.
MR. COHEN: Okay. Tell us quite.
NISHAD SINGH: There is not an exchange of value. There's a very small exchange of value in a liquidation trade. It's not that——it's not that the liquidating account is underwater and therefore needs to get topped up by other customers. It's that——it's that they have positions on that are risky that need to be handed off to other customers. Those other customers, be them backstop liquidity providers or those selected by ADL, receive the positions at slightly better than market value, being that in that moment they actually make some money. It's not that they're giving up their collateral for it, but they are taking on risk that they did not themselves put on.
MR. COHEN: Right. So using our example now, customer B or customer C or so forth, in your words, are having positions handed off to them.
NISHAD SINGH: Yes.
MR. COHEN: And they're going to get them at a favorable price, but they themselves are now at risk, correct?
NISHAD SINGH: Right. But it may turn favorable quickly.
MR. COHEN: Let me call your attention to July of 2020. Did FTX experience an auto-deleveraging event?
NISHAD SINGH: I recall it——I recall one around early August, so it's possible that this one was in July.
MR. COHEN: Okay. Why don't you tell us what happened.
JUDGE KAPLAN: Sustained.
MR. COHEN: Okay. What do you recall about the auto-deleveraging event that took place in July or August of 2020?
NISHAD SINGH: I recall that it happened that there were ADL fills for what I think was the first time in FTX's existence, meaning that the——forgive me, I'm using the abbreviation, or the acronym——the ADL system had kicked in, which meant that there were no——there was a point at which there was a liquidation and there were no eligible backstop providers.
MR. COHEN: So it went to the next level, to the customer level.
NISHAD SINGH: Right.
MR. COHEN: Correct. Were you aware if FTX had any response to this?
NISHAD SINGH: Yes.
MR. COHEN: What was it, sir?
NISHAD SINGH: I don't remember everything about it, but I can describe some things that I talked about with Sam and Gary——
MR. COHEN: Just describe what you remember.
NISHAD SINGH: It was undesirable for customers to take on these positions without opting in, basically being ADL recipients, all else equal. All else equal, this probably——this sort of universe of FTX customers and FTX itself would have preferred that it go to the designated backstop providers. Gary dug into why it was the case that there were no eligible providers. Gary determined that it was because, among other things, Alameda was not eligible and that Alameda was not eligible because its free collateral was zero and that the reason that its free collateral was zero was not because it had a bunch of positions but because it had tons and tons of open orders out——open orders for the purpose of providing liquidity on the hundreds of markets or so. Those exhaust collateral.
MR. COHEN: You said that having this auto-deleveraging event was undesirable. What did you mean by that?
NISHAD SINGH: It's my opinion. I don't know if I can sort of claim that there's a higher level truth to it being undesirable or not.
MR. COHEN: Well, you just said it. I'm just trying to get at what you meant by it.
NISHAD SINGH: Yeah, forgive me. I was clarifying. My opinion, and the opinion espoused by Sam and Gary at the time, was that having random customers take on the——these positions and have them handed off to them is worse than having designated customers take them on.
MR. COHEN: Okay. To your knowledge, Mr. Singh, was anything done in response to the auto-deleveraging event?
NISHAD SINGH: Yes.
MR. COHEN: What was that?
NISHAD SINGH: So Gary inferred that it was because——a cause was that Alameda was putting out a ton of orders and therefore had low collateral, had zero free collateral, but free for the——for the purposes of placing more orders or accepting trades, not free in the sense if they were to be liquidated, because there's an assumption that orders can be canceled upon liquidation, which would have just them getting a lot of collateral back.
JUDGE KAPLAN: You used the term pre collateral or free collateral. Would you explain that.
NISHAD SINGH: Free collateral.
JUDGE KAPLAN: First of all, was it pre collateral or free collateral?
NISHAD SINGH: Free collateral. Free meaning available.
JUDGE KAPLAN: Okay. A. Customers——to clarify that, customers in FTX deposited collateral. Collateral would be exhausted or, you know, made not free by putting on positions or by having open orders out on markets that, you know, were liable if traded against to create positions.
The latter thing, open orders, were primarily responsible, as Gary told me, for Alameda having zero free collateral at the time of the liquidation that caused the ADLs.
I believe you asked me what happened.
MR. COHEN: I did. And were any steps taken with respect to the code base upon that determination?
NISHAD SINGH: Yes.
MR. COHEN: What was that?
NISHAD SINGH: I think at first I added some alerts in the section of the code that would basically emit if Alameda had or others had zero free collateral, and if that was actually the cause, such that in the next instance if this happened, we had some more debugging visibility. We did, and it showed zero free collateral. It was talked about——but I don't remember if it actually happened——increasing Alameda's line of credit, because increasing it increases their free collateral. Lines of credit directly increased collateral and therefore free collateral.
MR. COHEN: And——I'm sorry. Finish your answer if you're not done.
NISHAD SINGH: Ultimately, Sam asked me why would it depend at all on free collateral if Alameda is just going to exhaust it all in open orders, and we know that the open orders aren't themselves risky, but not consuming collateral in the same way that having to position does, then why don't we, for Alameda, just remove the condition that we attend to its free collateral when determining if it's an eligible backstop provider for a liquidation.
MR. COHEN: And was that condition removed?
NISHAD SINGH: Yes.
MR. COHEN: That meant in an auto-deleveraging situation Alameda could again step in and be another source of capital.
NISHAD SINGH: It meant——correct. Specifically, the difference is that if the sole cause of Alameda being an ineligible backstop provider was that it didn't have enough free collateral, that was no longer considered.
MR. COHEN: And in your view, Mr. Singh, would that be helpful to customers?
NISHAD SINGH: Yes.
MR. COHEN: Why?
NISHAD SINGH: In my view at the time, it would be helpful to customers.
MR. COHEN: Why?
NISHAD SINGH: Because it would prevent the undesirable ADL as opposed to backstop fills.
MR. COHEN: Did you ever hear the term "code commits"?
NISHAD SINGH: Yes.
MR. COHEN: What does that mean to you?
NISHAD SINGH: A code commit is a package change of code submitted to a code base.
MR. COHEN: Did you ever author code commits?
NISHAD SINGH: All the time.
MR. COHEN: Okay. And were they——were these like notes you made for other developers to see?
NISHAD SINGH: There were elements of the code commits that were.
MR. COHEN: If we could call up for the witness——witness only——DX 1102.
Pursuant to Defense Exhibit S-3002, it's been stipulated that this document——
JUDGE KAPLAN: I'm sorry. DX 3002?
MR. COHEN: Yes, that's the stipulation as to the authenticity of this document.
BY MR. COHEN:
MR. COHEN: Mr. Singh, can you take a moment and take a look at what's been marked as Defense Exhibit 1102.
NISHAD SINGH: I see it. And forgive me. This isn't what you asked, but——
JUDGE KAPLAN: Just a minute.
NISHAD SINGH: Yes.
JUDGE KAPLAN: You stick to answering the questions that are asked, okay?
NISHAD SINGH: Okay.
MR. COHEN: I think we've worked it out, your Honor.
JUDGE KAPLAN: What have you worked out?
MR. ROOS: I was just asking Mr. Cohen if it's just this page. I couldn't tell. And assuming it's just this page, no objection.
JUDGE KAPLAN: Well, first of all, is 3002 being offered?
MR. COHEN: 3002 is the stipulation, your Honor.
JUDGE KAPLAN: Yes, but has it been offered?
MR. COHEN: We offer 3002.
JUDGE KAPLAN: Received.
(Defendant's Exhibit S-3002 received in evidence)
JUDGE KAPLAN: Now what about this 1102?
MR. COHEN: Your Honor——
JUDGE KAPLAN: Let's get the first question answered. Is it a one-page document?
MR. COHEN: It is not.
JUDGE KAPLAN: It is not.
MR. COHEN: It is not. We would like to offer page 1 and page 18, pursuant to the stipulation.
JUDGE KAPLAN: Pages 1 and 18 of Defendant's 1102 are received.
(Defendant's Exhibit 1102 (pages 1 and 18 only) received in evidence)
MR. COHEN: Can we publish those to the jury, your Honor.
JUDGE KAPLAN: You may.
MR. COHEN: Brian, could you call them up, please.
BY MR. COHEN:
MR. COHEN: All right. Let's start with page 1, Mr. Singh. Is this an example of a code commit, the top of page 1?
NISHAD SINGH: Yes, this is one representation of a code commit.
MR. COHEN: So if you look at the——
MR. COHEN: Brian, if you could call out the top paragraph.
MR. COHEN: Okay. So this one, for example, is author Gary Wang, date May 23rd, "add borrow column to balances." What's your understanding of what this means?
NISHAD SINGH: Forgive me. What do you mean by "this"?
MR. COHEN: My question is simply: Is this an example of a type of code commit?
JUDGE KAPLAN: Asked and answered.
MR. COHEN: Okay. Let's go to page 18.
Okay. If we could go to the top, the top box. We've been talking about the period of August 2020 and the auto-deleveraging event, and there's a line that says, "Author: Nishadsingh1." Is that you, sir?
NISHAD SINGH: That's me.
MR. COHEN: And there's an entry that says "address ADLs (#977)." Do you see that, sir?
NISHAD SINGH: I see it.
MR. COHEN: What did that refer to?
NISHAD SINGH: A little easier if——I could be more confident if I read the corresponding code, but I assume this is one of the two changes I discussed so far——there were others——about making ADLs less likely.
MR. COHEN: Okay. And continuing on the page.
MR. COHEN: If we go down to the next box. Go down further. Okay. Call that out.
MR. COHEN: This is another code commit written by you, sir?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And it says, "be extra careful not to liquidate PMM, clean up messages." Do you see that, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. What's a PMM?
NISHAD SINGH: The primary market maker, which meant Alameda.
MR. COHEN: Okay. Because at the time it was the main market maker for FTX, correct?
NISHAD SINGH: PMM is also how the code referred to that.
MR. COHEN: And what did you mean by "be extra careful not to liquidate"?
NISHAD SINGH: I think answering this requires me continuing the story of what happened in response to ADLs.
MR. COHEN: Go ahead.
JUDGE KAPLAN: What's the objection?
JUDGE KAPLAN: Yes. We have to take a very short break in any case.
MR. COHEN: Oh, okay.
JUDGE KAPLAN: I think ten minutes ought to be enough.
COURT CLERK: Would the jury please come this way.
(Continued on next page)
(Jury not present)
JUDGE KAPLAN: Be seated, folks.
So you have something to take care of that was discussed earlier today. This is the time.
MR. COHEN: Okay. Thank you, your Honor.
(Recess)
(In open court; jury not present)
JUDGE KAPLAN: Mr. Roos, the point you wanted to take up at some point, the evidence issues, how long do we need for that?
JUDGE KAPLAN: All right. We'll do it after we send the jury to lunch.
JUDGE KAPLAN: Okay. Let's go.
(Continued on next page)
(Jury present)
JUDGE KAPLAN: The record will reflect that the defendant and the jurors all are present, as they have been throughout.
You may continue, Mr. Cohen.
MR. COHEN: Thank you, your Honor.
If we could bring up the exhibit we were just looking at.
BY MR. COHEN:
MR. COHEN: And these are more general questions, Mr. Singh.
As a general matter, who at FTX was able to access these codes, these codes we were looking at? The code commits. Excuse me.
JUDGE KAPLAN: Yes. You need one.
MR. COHEN: Hmm?
JUDGE KAPLAN: Foundation.
MR. COHEN: Sure.
MR. COHEN: Based on your experience as head of engineering at FTX, did you have an understanding of who might access the code commits we were just looking at?
NISHAD SINGH: They were available to the whole company in Slack, if nothing else. There were Slack logs of all the messages.
MR. COHEN: Okay. Let me ask you another general question. From the FTX side, based on your experience as the head of engineering, who could have access; who could observe Alameda's accounts on FTX?
JUDGE KAPLAN: Yes, sustained.
MR. COHEN: Mr. Singh, based on your experience as the head of engineering, did you have an understanding about accessing customer accounts on the exchange, viewing customer accounts on the exchange?
JUDGE KAPLAN: Yes. Look, this isn't a matter of opinion. He either knows or he doesn't know.
MR. COHEN: Yeah.
MR. COHEN: Did you know, Mr. Singh, whether you could see the Alameda accounts on the FTX exchange?
NISHAD SINGH: Whether I personally could?
MR. COHEN: Yes.
NISHAD SINGH: Yes, I could.
MR. COHEN: How were you able to do that?
NISHAD SINGH: The way any other FTX staff member could, using the admin portal.
MR. COHEN: Okay. And the admin portal was a portal on FTX?
NISHAD SINGH: Yes.
MR. COHEN: So for an FTX person to look at customer accounts and balances, so forth.
NISHAD SINGH: That was not the purpose.
MR. COHEN: What was the purpose?
NISHAD SINGH: Customer support reasons might require looking at a customer's——
MR. COHEN: Understood, understood, understood. But in addition to that, it allowed the FTX side to look at the customer accounts.
NISHAD SINGH: Yes.
MR. COHEN: Okay. Let's move to another topic, Mr. Singh.
Did you ever hear of an entity called FTX US Derivatives?
NISHAD SINGH: Yes.
MR. COHEN: What was that?
NISHAD SINGH: A company that used to be named LedgerX, I believe.
MR. COHEN: And what business was LedgerX in?
NISHAD SINGH: It operated crypto options.
MR. COHEN: And let me back up. Do you know who ran LedgerX?
NISHAD SINGH: Zach Dexter in the period that I was aware of.
MR. COHEN: And just to set a foundation, what period was that?
NISHAD SINGH: 2021 and 2022.
MR. COHEN: Did there come a time that FTX acquired LedgerX, if you know?
NISHAD SINGH: Yes.
MR. COHEN: About when was that?
NISHAD SINGH: Also sometime in '21 or '22.
JUDGE KAPLAN: Before or after Zach Dexter was running it?
NISHAD SINGH: I believe after.
MR. COHEN: And did Mr. Dexter continue to run the company even after it was acquired, or run what used to be LedgerX?
NISHAD SINGH: That's my belief, but I have no firsthand knowledge.
MR. COHEN: Okay. Now Mr. Dexter, he was not a founder of FTX, correct?
NISHAD SINGH: He wasn't.
MR. COHEN: He was not a founder of Alameda, correct?
NISHAD SINGH: Correct.
MR. COHEN: Okay. What did FTX US Derivatives's trading platform deal in, if you know?
NISHAD SINGH: Forgive me. Are you referencing the potential integration into FTX.US or what Zach Dexter's existing company did?
MR. COHEN: Integration.
NISHAD SINGH: The integration would support futures to be offered to US customers, pending approval.
MR. COHEN: And you said pending approval. What did you mean by that, sir?
NISHAD SINGH: There was some regulatory process they were engaging in to get approval to list these futures.
MR. COHEN: Do you know what entity they were seeking to get approval from?
NISHAD SINGH: At least the CFTC and maybe others.
MR. COHEN: And I believe you told us yesterday that the CFTC was the commodities trading commission, I think was how you put it.
NISHAD SINGH: Yeah. Forgive me. I don't remember——I don't know exactly what it is, but——
MR. COHEN: Did you, Mr. Singh, have any involvement with this process of trying to get approval?
NISHAD SINGH: I believe I described yesterday the only part that I participated in.
MR. COHEN: What was that?
NISHAD SINGH: It was Zach Dexter——it was me fulfilling Zach Dexter's request to show Alameda's historical collateral and collateral needs in their main account.
MR. COHEN: And for this application for approval, did the topic of how liquidations were handled at FTX come up?
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you know, sir, based on your interactions with Mr. Dexter, what topics came up in connection with the application for approval?
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you have occasion, Mr. Singh, to review any materials in connection with the application?
NISHAD SINGH: There was at least one point in September of 2022 when Zach Dexter sent me an excerpt from the application.
MR. COHEN: What did that excerpt refer to?
JUDGE KAPLAN: Ground.
MR. COHEN: What was the topic of the——
NISHAD SINGH: Special privileges for Alameda.
MR. COHEN: And did you review that, sir?
NISHAD SINGH: I responded to it, yes.
MR. COHEN: And you responded to Mr. Dexter.
NISHAD SINGH: Yes.
MR. COHEN: What was the nature of the response?
JUDGE KAPLAN: Why not, Mr. Cohen?
MR. COHEN: It's for the effect on the listener, your Honor.
JUDGE KAPLAN: On Mr. Dexter?
MR. COHEN: No. Excuse me. It's for Mr. Singh's state of mind.
JUDGE KAPLAN: Sustained.
MR. COHEN: Hmm?
JUDGE KAPLAN: Sustained.
MR. COHEN: I'm sorry. Okay.
JUDGE KAPLAN: 401 and 403.
BY MR. COHEN:
MR. COHEN: Oh, let me go back. I meant to ask you: You testified yesterday about Alameda's line of credit. Do you recall that, sir?
NISHAD SINGH: Yes.
MR. COHEN: And I think you told us that the line of credit at some point was set to $65 billion, correct?
NISHAD SINGH: I believe that was its value at the time of the collapse.
MR. COHEN: Did you have any experience in understanding the amount of——amount that was actually drawn down on the letter of credit?
NISHAD SINGH: I calculated how much the main account was drawing on.
MR. COHEN: When did you do that, sir?
NISHAD SINGH: I believe it was early September.
MR. COHEN: Okay. That was my question. Prior to that point, prior to September, were you involved with any calculations of the actual drawdowns on the letter of credit?
NISHAD SINGH: In a way.
MR. COHEN: What do you mean by that?
NISHAD SINGH: There was an exercise I believe sometime in 2021 to write code that would charge Alameda on one definition of its used line of credit. I made modifications to it after Gary wrote it.
MR. COHEN: What modifications did you make?
NISHAD SINGH: I can't remember all of them. One of them was including more forms of collateral that Sam had proposed.
MR. COHEN: Okay. Yes or no: In connection with that modification you worked on, did you come to learn about the usage of the line of credit prior to September 2022?
NISHAD SINGH: In the sense that it matched the definition used by this line of interest processor.
MR. COHEN: Did you come to learn the number, the value, the balances used?
NISHAD SINGH: I remember——I remember one of the——indirectly.
MR. COHEN: What do you mean by that?
NISHAD SINGH: I remember the revenue associated with this, with these fees, and I knew the rate that Alameda was charged on its used line of credit. Dividing one by the other suggests what the used line of credit was.
MR. COHEN: And what was it?
NISHAD SINGH: I recall at some point it being $2 billion because they were charged one basis point.
MR. COHEN: Okay.
NISHAD SINGH: And the daily revenue from them was $200,000.
MR. COHEN: And approximately when did you do that analysis?
NISHAD SINGH: Would have been mid or late '21.
MR. COHEN: New topic, Mr. Singh. You testified about an adjustment involving something called EcoSerum. Do you recall that, sir?
NISHAD SINGH: Are you referring to the Serum staking fees?
MR. COHEN: Yes.
NISHAD SINGH: I recall that.
MR. COHEN: Okay. And rather than me trying to summarize it, why don't you tell us what you testified to about that.
JUDGE KAPLAN: Sustained.
MR. COHEN: Okay. Mr. Singh, didn't you tell us yesterday that you were asked to look at the staking fees, for Serum?
JUDGE KAPLAN: Sustained.
MR. COHEN: Okay. Mr. Singh, let me back up.
What are staking services, Mr. Singh?
NISHAD SINGH: I can describe what Serum staking was in the context of FTX.
MR. COHEN: That would be fine.
NISHAD SINGH: Serum was a token. It was available on FTX in both locked and unlocked forms. FTX supported staking facility in which customers could designate their Serum balances as staked, which would make them unsellable but would, on an hourly or daily cadence——that changed over time——reward them with some interest, also paid out in either Serum or locked Serum. This mirrored a lot of staking behaviors of other coins on——in various other contexts.
MR. COHEN: Did FTX charge a——receive any payment for these services?
NISHAD SINGH: Only in the sense that I doctored them.
MR. COHEN: Well, in your experience you said this was——this took place on other exchanges as well. In your experience did other exchanges receive payment for providing staking services?
JUDGE KAPLAN: Sustained.
MR. COHEN: He just said it.
MR. COHEN: Okay. Mr. Singh, did you have experience with other exchanges and their——whether or not they charged for staking services?
NISHAD SINGH: I had experience with some elements of other exchanges. I do not have experience with other exchanges' staking services.
MR. COHEN: Now I believe you testified that Mr. Bankman-Fried directed you to backdate the Serum staking services document, correct?
MR. COHEN: Okay. Tell us.
NISHAD SINGH: Forgive me. Tell us what?
MR. COHEN: You said no, so I don't want to get your testimony incorrect. What was your testimony, Mr. Singh?
NISHAD SINGH: Sam instructed me to backdate the payments. I didn't know anything about the document.
MR. COHEN: But that ultimately did not take place, correct?
NISHAD SINGH: Sorry. What didn't take place?
MR. COHEN: You ended up not doing the backdated transaction, correct?
NISHAD SINGH: No, I did. I backdated them.
MR. COHEN: Okay. But you said you're not aware of the document, correct?
NISHAD SINGH: I'm not a——there was a document shown yesterday relating to an agreement between EcoSerum and FTX. That was not a document that I had seen until after the collapse of FTX.
MR. COHEN: Let's turn to a new topic, Mr. Singh.
I believe you testified yesterday that there came a time that you got involved in political spending, correct?
NISHAD SINGH: Yes.
MR. COHEN: Okay. About when was that?
NISHAD SINGH: In 2018, I became really excited about Prop 12 in California.
MR. COHEN: And as a result of that, did you make any donations?
NISHAD SINGH: I did in that I believe I deducted from my floating balance at Alameda so Alameda would pay——like, would donate it.
MR. COHEN: Okay. And turning to later in time, 2021 or so, did there come a time that you started to make donations in much larger amounts?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And I believe you told us that the process was that——well, is it fair to say that you wanted to make donations but you didn't want to be in the weeds with respect to the process?
NISHAD SINGH: For some of them.
MR. COHEN: Okay. Which ones?
NISHAD SINGH: I——it's hard for me to enumerate them all.
MR. COHEN: Okay. Is it fair to say that in terms of your political donations, you worked with various political consultants?
NISHAD SINGH: Sam and Gabe and Barbara.
MR. COHEN: Did you also work with someone named Michael Sadowsky?
NISHAD SINGH: Yes.
MR. COHEN: And Keenan Lantz?
NISHAD SINGH: Yes.
MR. COHEN: Okay. And Gabe was Mr. Bankman-Fried's brother?
NISHAD SINGH: Yes.
MR. COHEN: And he was a friend of yours from high school.
NISHAD SINGH: Dear friend.
MR. COHEN: Right. And you worked with him in terms of political——political spending, correct?
NISHAD SINGH: Yes.
MR. COHEN: You said you engaged him as a consultant, correct?
NISHAD SINGH: I don't think I said that, but I did.
MR. COHEN: You did. In fact, you signed a——or you entered into a written consulting agreement with him, correct?
NISHAD SINGH: Yes.
MR. COHEN: And Mr. Sadowsky was also an experienced political consultant, correct?
NISHAD SINGH: I don't know his experience.
MR. COHEN: Okay. Well, did you believe he was in that field?
NISHAD SINGH: Yes.
MR. COHEN: Okay. What about Mr. Lantz?
NISHAD SINGH: I don't——I don't know if I knew anything about Keenan Lantz's background.
MR. COHEN: Okay. And the process was, at least with respect where the consultants were involved, that they would make recommendations to you about where to make donations and you would decide whether you wanted to make them, correct?
NISHAD SINGH: There were many different processes.
MR. COHEN: All right. Well, why don't you go through each one if there was more than one.
NISHAD SINGH: It will take some time.
MR. COHEN: Why don't you just go through them by topic.
JUDGE KAPLAN: I'm sorry. By topic?
MR. COHEN: Yeah. I don't want to have to have the witness give a long narrative.
JUDGE KAPLAN: Ask a question.
MR. COHEN: I will. Okay.
BY MR. COHEN:
MR. COHEN: Were there times, sir, when you would receive a communication from Mr. Sadowsky about a contribution he suggested you make?
NISHAD SINGH: I can't remember if it was Sadowsky or Gabe, but there were times when I did receive communications from them about donations they'd want me to make.
MR. COHEN: And then you would tell them whether you wanted to make them or not, correct?
NISHAD SINGH: In some cases.
MR. COHEN: Okay. Well, why don't we take a look at——one moment.
Why don't we take a look at GX 477, please, in evidence.
Do you recall this document, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. This is a chain between you and Mr. Sadowsky, correct?
NISHAD SINGH: It is.
MR. COHEN: And the blue section at the top is your writing, correct, or your comment?
NISHAD SINGH: Yes.
MR. COHEN: So you were saying to Mr. Sadowsky that you were averse to "explicitly woke stuff." What did you mean by that?
NISHAD SINGH: I preferred not to be giving to causes that were explicitly far on the left.
MR. COHEN: Okay. But then you go on to say, "but if it's especially good or if it's hard to interact productively with Democrats without that, I understand." Do you see that, sir?
NISHAD SINGH: I do.
MR. COHEN: Okay. And if we could scroll down to the next page.
And in the gray is Mr. Sadowsky's responses, right?
NISHAD SINGH: Right.
MR. COHEN: Okay. And the bottom of the page, he says, so——at the bottom, second from the bottom here, "So if you're not comfortable about it, you should think about that a lot." "You should think about how comfortable you're going to be with it." Do you see that, sir?
NISHAD SINGH: I do.
MR. COHEN: Mr. Sadowsky was telling you that if you weren't comfortable with that donation, you didn't have to make it.
NISHAD SINGH: I'm not sure if that's what he was saying.
MR. COHEN: Are you saying that Mr. Sadowsky was telling you to make donations you didn't want to make?
NISHAD SINGH: I think when he says it here, it may be in reference to me being the centralized face of their spending and not specifically this donation.
MR. COHEN: Okay. And in reference to that, if you didn't want to be the central face of the spending, you didn't have to, correct?
NISHAD SINGH: Not clear to me he's saying I didn't have to.
MR. COHEN: Okay. In your view, did you feel that you were required to be the face of the political spending?
NISHAD SINGH: Not required.
MR. COHEN: Okay. All right. So you told us also about a chat you were on called Donation Processing. Do you recall that, sir?
NISHAD SINGH: I do.
MR. COHEN: And that was a chat involving someone named Ryan Salame?
NISHAD SINGH: Yes.
MR. COHEN: And again, who was he?
NISHAD SINGH: He went by many titles, among them CEO of FTX digital markets.
MR. COHEN: Okay. And prior to that he had been at Alameda, correct?
NISHAD SINGH: Maybe concurrent with that.
MR. COHEN: And I believe you said that this was a Signal chat called Donation Processing, correct?
NISHAD SINGH: Correct.
MR. COHEN: And the way it would work is Mr. Salame would prepare a wire transfer, correct, to a political candidate?
NISHAD SINGH: That was part of what was coordinated in that thread, yes.
MR. COHEN: And in that thread it would be presented to you for you to approve or not, correct?
NISHAD SINGH: I would be pinged to click OK in my email.
MR. COHEN: And if you didn't click OK, it wouldn't be sent.
NISHAD SINGH: In some sense.
MR. COHEN: In some sense. So you're saying that donations were made without you clicking yes.
NISHAD SINGH: Many of them were.
MR. COHEN: Okay. And the ones in the queue, in the donation processing queue.
NISHAD SINGH: Yes.
MR. COHEN: Okay. So you're saying that when Mr. Salame pinged you to okay the donation, that was unnecessary?
JUDGE KAPLAN: That's not what he said. They pinged him with wire transfers.
NISHAD SINGH: Right.
MR. COHEN: So are you saying that wire transfers would go out of your account without you responding to the pings you received from Mr. Salame?
NISHAD SINGH: I think ones of some sizes would, and not all donations using my name were done in this manner anyway.
MR. COHEN: Well, on the ones in the donation——in the Donation Processing chat, that's what I'm asking about now.
NISHAD SINGH: There were ones discussed in that chat that did not go through my PrimePlus bank account and did not require me to click OK.
MR. COHEN: Now the funds that you received to make political donations, they were loans to you, correct?
NISHAD SINGH: In a loose sense, some of them were loans.
MR. COHEN: Well, didn't you feel that you were obligated to pay them back, sir?
NISHAD SINGH: That is a loose sense in which I felt that they were——might have been loans.
MR. COHEN: Well, you were either obligated to pay them back or you weren't, right?
NISHAD SINGH: I don't think it's that simple.
MR. COHEN: Okay. So when you saw transfers into your account for political donations, didn't you view them as loans to you that you were on the hook for?
NISHAD SINGH: I viewed them as things I was on the hook for.
MR. COHEN: And to take it out of colloquialism, "on the hook for" means you had to pay them back.
NISHAD SINGH: I expected and wanted to pay them back. "Had to" relies on affirmative mutual understanding that may not have existed in some cases.
MR. COHEN: So you did have to pay them back or you didn't have to pay them back?
NISHAD SINGH: I am not sure what the donor, or what, like, the loanee thought, or what the person lending to me, the lender, thought.
MR. COHEN: So if I'm understanding you correctly, you didn't think you were on the hook for the loans.
NISHAD SINGH: I expect——I wanted to pay them back. That is distinct from there being any understanding or discussion about that.
MR. COHEN: Okay. Can we call up 3501-28, please.
JUDGE KAPLAN: Sustained.
MR. COHEN: Mr. Singh, during the time you worked for FTX did you file tax returns?
NISHAD SINGH: Yes.
MR. COHEN: And did you have an accountant who prepared them for you?
NISHAD SINGH: Robert Lee.
MR. COHEN: And did you provide your accountant with information about the political donations you made?
NISHAD SINGH: Some of them, yes.
MR. COHEN: Because you wanted to take account of them in payment of your taxes, correct?
NISHAD SINGH: Or make them just known to the people thinking about my finances, yes.
MR. COHEN: Okay. Now let me back up and ask a foundation question.
You mentioned yesterday a person named Jayesh Peswani. Do you recall that?
NISHAD SINGH: Yes.
MR. COHEN: And just to remind the jury, who was he?
NISHAD SINGH: The head of finance at FTX.
MR. COHEN: Okay. And I think you mentioned yesterday that you asked——sometime in 2021 you asked Mr. Peswani for a list of Alameda's loans to you.
NISHAD SINGH: I think I asked for that in October of 2022.
MR. COHEN: And what was your reason for asking?
NISHAD SINGH: I expected it to list a lot of transfers to me.
MR. COHEN: Okay. You expected it to list transfers to you because you wanted to understand what you were responsible for, correct?
NISHAD SINGH: I wanted to confirm it matched what had flown through my bank account.
MR. COHEN: So you just wanted to know what was going through your bank account; you didn't really think you were responsible for it.
NISHAD SINGH: It was my desire and expectation to repay some of the transfers that had gone through my account. I didn't know if there was separate accounting of it, and I never talked about those expectations, or asked for something that could document that.
(Continued on next page)
MR. COHEN: So you were unclear, you're telling us, about whether or not you had a responsibility to pay the loans back?
NISHAD SINGH: Yes. To clarify, I am not sure they were loans, the transfers.
MR. COHEN: Isn't it true, Mr. Singh, that you thought that the money going into your account were donations that you were obligated to repay?
NISHAD SINGH: Obligated is complicated and might rely on mutual understanding.
MR. COHEN: That you were on the hook for those funds?
JUDGE KAPLAN: We have done this already, Mr. Cohen.
MR. COHEN: Let's call up 3501-103, please.
MR. COHEN: Do you recall in one of your many interviews being interviewed by the government attorneys on February 24 of this year?
NISHAD SINGH: I don't remember exact dates.
MR. COHEN: You recall being interviewed in February?
NISHAD SINGH: Yes.
MR. COHEN: And you recall telling the prosecutors that you thought of the money going to you to make donations as money that you were obligated to pay and that you were on the hook for those funds?
NISHAD SINGH: I don't remember the exact words I used.
MR. COHEN: Was that the substance of what you told them?
NISHAD SINGH: That's similar.
MR. COHEN: That you were on the hook for them?
NISHAD SINGH: That I believed that I was on the hook and I wanted to repay them.
MR. COHEN: Now, didn't you also believe, sir, that when you received these transfers that you wanted to have them booked as loans?
NISHAD SINGH: Sorry. Could you repeat the question?
MR. COHEN: Sure. When you received what you called -- I'm trying to use your language -- transfers to make political donations, you thought of them as loans and tried to get them booked as loans.
NISHAD SINGH: I expected that they would be booked as loans.
MR. COHEN: And you tried to get them booked as loans, correct?
NISHAD SINGH: In a sense.
MR. COHEN: Do you recall speaking with the government in January?
NISHAD SINGH: Yes.
MR. COHEN: January 19?
NISHAD SINGH: Um-hum.
MR. COHEN: You recall telling the prosecutors that when you did see the transfers into your account, you thought of them as loans and tried to get the transfers booked as loans.
NISHAD SINGH: I don't remember exactly what I said. It seems believable.
MR. COHEN: Sorry?
NISHAD SINGH: Seems believable.