In a surprising decision reported by The NYT today, former FTX executive Nishad Singh was sentenced to probation by District Judge Lewis Kaplan, effectively freeing him from further incarceration, as requested by his lawyer.
Singh, who was the chief engineer at FTX, was a central figure in the cryptocurrency exchange’s fraudulent activities and pleaded guilty to six criminal charges, including fraud and conspiracy, earlier this year.
The sentencing decision follows major courtroom developments related to the collapse of FTX, which stemmed from the misappropriation of some $8 billion in customer funds organized under the leadership of Sam Bankman-Fried.
As FTX’s chief engineer, Singh played a key role in FTX’s operations and was initially implicated as a “straw donor” in campaign finance charges related to Bankman-Fried’s political contributions.
In exchange for a lighter sentence, Singh became a key prosecution witness, providing detailed information on the inner workings of the FTX scam during the Bankman-Fried trial.
Singh’s cooperation was crucial. During FTX’s Chapter 11 proceedings, the company’s bankruptcy CEO, John J. Ray III, wrote a formal letter to Judge Kaplan urging a lenient sentence, highlighting Singh’s “valuable assistance” in recovering assets for FTX’s creditors.
Ray praised Singh for voluntarily returning assets purchased with misappropriated funds and sharing key information to support ongoing bankruptcy efforts. Federal prosecutors also recognized Singh’s substantial assistance with the 5 K letter, which helped secure today’s verdict.
Implications and Judge Kaplan’s decision
While prosecutors and the FTX bankruptcy CEO had called for a lenient sentence due to Singh’s cooperation, the judge’s decision was notable in the broader context of harsh penalties for others involved in the FTX scandal.
Singh’s former colleague Caroline Ellison was sentenced to two years in prison last month, reflecting the importance placed on executive accountability. Judge Kaplan had previously stressed that, while important, Singh’s role did not appear to be as well thought out as that of other key figures in the fraud, which influenced the suspended sentence.
Singh’s attorneys argued that his relatively late involvement in FTX activities reduced his culpability compared to other directors. His willingness to cooperate further shaped today’s sentence, and Judge Kaplan cited Singh’s ongoing involvement in helping to recover FTX assets as a factor in the lenient decision.
The court’s ruling came amid increasing regulatory scrutiny of cryptocurrency donations and the broader implications of FTX’s collapse. Once the verdict is finalized, the former FTX executive is expected to continue to assist the FTX bankruptcy team in recovering assets.
