FTX top engineer testifies Bankman-Fried spent $1.13 billion on celebrities and sponsorships
Nishad Singh, former director of Engineering at FTX Cryptocurrency Derivatives Exchange, arrives at court in New York, on Monday, Oct. 16, 2023.
Yuki Iwamura | Bloomberg | Getty Images
Nishad Singh, FTX’s former director of engineering, told jurors on Monday that Sam Bankman-Fried, the founder of the failed crypto exchange, spent huge sums of money on everything from real estate and venture investments to campaign donations and celebrity endorsements.
Singh took the stand in Manhattan Federal Court, as the third week of Bankman-Fried’s criminal trial kicked off, with prosecutors continuing to call the defendant’s closest one-time confidants to the stand. Ex-girlfriend Caroline Ellison, who ran sister hedge fund Alameda Research, testified last week. She was preceded by Bankman-Fried’s former close friend and college roommate Gary Wang, who was an FTX co-founder.
In response to questions from Assistant U.S. Attorney Nicolas Roos, Singh said he frequently went to Bankman-Fried to voice his concerns over the company’s spending. He told the court that he would tell Bankman-Fried he was “embarrassed” and “ashamed,” and that the level of spending “wreaked of excessiveness” and “flashiness.”
How Bankman-Fried, 31, spent FTX money is a critical piece of the prosecution’s case because the bulk of the alleged fraud revolves around what happened to billions of dollars of customer funds that were supposed to be invested in crypto and held in client accounts but later disappeared. Bankman-Fried faces seven criminal counts related to the collapse of FTX and Alameda, including wire fraud, securities fraud and money laundering that could put him in prison for life. He’s pleaded not guilty.
Like Ellison, Singh is cooperating with the prosecution as part of a plea deal he agreed to in February. At the time, Singh pleaded guilty to six charges, including conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to violate campaign finance laws.
Singh, who grew up in the Bay Area, testified that he met the defendant during his sophomore or junior year of high school, through Bankman-Fried’s younger brother, Gabe. Singh studied electrical engineering and computer science at the University of California at Berkeley and briefly worked at Facebook before joining Alameda in 2017.
Assistant U.S. Attorney Nicolas Roos questions Nishad Singh, the former director of engineering at FTX, at Sam Bankman-Fried’s fraud trial over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, October 16, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Regarding the technology at FTX and Alameda, Singh said, “Sam didn’t code himself but he was very involved in the coding process” and the minutiae of the architecture. “Sam designed all the rules for margin system and the liquidation engine,” which were “core to FTX,” he said.
Singh said he lived with Bankman-Fried in late 2021 at FTX’s lavish property in the Bahamas. He said he had “always been intimidated by Sam,” calling him a “formidable character.” But he said his admiration and respect “eroded over time.”
In mid-2022, Singh said he first learned of the hole in the balance sheet and the massive amounts of money Bankman-Fried had spent on real estate, startup investments speculative bets and political donations.
Hundreds of millions of dollars in endrosements
The court showed a spreadsheet of investments made in 2021. They included $1 billion to Genesis for a mining company, $499 million to startup Anthropic and $200 million to investment firm K5.
Singh said the K5 outlay was most troubling. He said Bankman-Fried sent him a term sheet detailing hundreds of millions of dollars of bonuses to the owners, Michael Kives and Bryan Baum. That followed a K5 dinner Bankman-Fried attended alongside Hillary Clinton, Katy Perry, Orlando Bloom, Leonardo DiCaprio, and Kris and Kylie Jenner.
Singh said he told Bankman-Fried he was very concerned and that the K5 investment was “value extractive.” He also said he asked Bankman-Fried if the investment was his with his money, not FTX’s. The spreadsheet showed it came from Alameda.
Before the court took a break, the jury was given a separate spreadsheet of celebrity sponsorship deals. They included $205 million for FTX arena in Miami, $150 million to Major League Baseball, $28.5 million to Stephen Curry, $50 million to Tom Brady and Giselle Bundchen and $10 million to Larry David. The deals on the spreadsheet amounted to a total of $1.13 billion.
Singh admitted that even after learning customer money was involved in FTX spending, he still implicitly and explicitly gave the green light for transactions.
The logo of FTX is seen on a flag at the entrance of the FTX Arena in Miami, Florida, November 12, 2022.
Marco Bello | Reuters
Singh said he owned 6% or 7% of FTX, making him a paper billionaire when the company was valued by private investors at $32 billion in early 2022.
When he brought his concerns about profligate spending to Bankman-Fried, Singh said he often got no response. If Bankman-Fried did reply, he would say that Singh didn’t haven sufficient context, according to the testimony.
Singh gave an example of a more public interaction at work, when he said the company was “fleeced for $20 million.” Singh said Bankman-Fried lashed out at him and said people like him were responsible for sewing seeds of doubt and were the real problem.
Prior to the resumption of the trial at 9:30 a.m. on Monday, Bankman-Fried’s lawyers placed a late-night appeal on Sunday to U.S. District Judge Lewis Kaplan, requesting that their client be given more Adderall before being taken to the courthouse. Bankman-Fried told a Bahamas judge in December that he took medication to treat depression and attention deficit hyperactivity disorder (ADHD), which is among the most common neurodevelopmental disorders in children.
The trial is expected to last well into November.
WATCH: Caroline Ellison details SBF’s involvement in running Alameda Research
Dario Amodei, Anthropic CEO, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 21st, 2025.
Gerry Miller | CNBC
Anthropic on Tuesday announced it has closed a $13 billion funding round at a $183 billion post-money valuation, roughly triple what the artificial intelligence startup was worth as of its last raise in March.
The most recent funding round was led by Iconiq, Fidelity Management & Research Company and Lightspeed Venture Partners. Other investors including Altimeter, General Catalyst and Coatue also participated, Anthropic said.
“This financing demonstrates investors’ extraordinary confidence in our financial performance and the strength of their collaboration with us to continue fueling our unprecedented growth,” Anthropic finance chief Krishna Rao said in a statement.
Anthropic’s valuation has been on a steep climb since it announced its AI assistant Claude in March 2023. The Amazon-backed startup was founded by former OpenAI research executives, including its CEO Dario Amodei.
OpenAI and Anthropic are fierce competitors in the AI market. OpenAI, which rocketed into the mainstream following the release of its AI chatbot ChatGPT in 2022, is preparing to sell stock as part of a secondary sale that would value the company at roughly $500 billion, as CNBC reported in August.
As of August, Anthropic said its run-rate revenue has reached over $5 billion, up from roughly $1 billion at the beginning of the year. Anthropic serves more than 300,000 business customers, the company said.
Anthropic said it will use its fresh capital to deepen safety research, meet growing enterprise demand and support international expansion.
WATCH: As Anthropic goes, so goes the generative AI trade, says Big Technology’s Alex Kantrowitz
Marc Benioff, co-founder and CEO of Salesforce, attends the 50th World Economic Forum in Davos, Switzerland, on Jan. 21, 2020.
Denis Balibouse | Reuters
There was a moment, during the pandemic-fueled growth days of 2020, when Salesforce surpassed Oracle by market cap. Marc Benioff had finally toppled his protege, Larry Ellison.
That moment is long gone.
Salesforce’s stock price has dropped 25% this year, the worst performance in large-cap tech and the second-steepest decline in the Dow, beating only UnitedHealth. Meanwhile, Oracle has jumped 34%, outperforming most of its peers and well outpacing the major indexes.
The two companies that were once about even by valuation are now separated by about $400 billion. Oracle is worth $630 billion, and Salesforce has dropped to $239 billion. Ellison now ranks second behind Elon Musk on the Bloomberg Billionaires Index, with a $278 billion net worth. Benioff sits in 318th place at $10.4 billion.
Investors are eager to hear how Benioff plans to right the ship when Salesforce reports quarterly results after the close on Wednesday.
Sales growth has been mired in the single digits for four straight quarters as the company reckons with the challenges of saturation in its key market of customer relationship management software. That streak is expected to continue, with analysts estimating revenue growth of 8.7% to $10.1 billion, according to LSEG.
During the April period, about a quarter of Salesforce’s $9.3 billion in subscription and support revenue came from products related to customer service, its biggest category. The company charges for its Service Cloud offering based on the number of agents who use the software.
With the rapid rise of artificial intelligence, some analysts predict more inquiries will be handled through automation, posing a risk to Salesforce.
Benioff is well aware of the challenge. He said in June that AI is already handling about 30% to 50% of the company’s work. It’s a big reason why Salesforce reportedly slashed 1,000 jobs earlier this year.
When it comes to customers, Salesforce now sells Agentforce, an AI system for answering customer support requests. After becoming available in October, Agentforce was delivering $100 million in annualized revenue, Benioff told analysts on a conference call in May.
“It’s not significant enough to move the needle on this business, given the scale,” said Michael Turrin, a Wells Fargo analyst who has a hold recommendation on Salesforce shares.
The hope is that customers end up paying more for Agentforce than for Service Cloud, Turrin said.
The big difference for Oracle is that it’s one of the early beneficiaries of the AI boom. Known primarily for its database software that sits inside big companies and government agencies, Oracle has notched cloud infrastructure commitments from OpenAI and Musk’s xAI.
Agentforce could be Salesforce’s window into AI business, if it gains traction.
“I think there’s been a lot of frustration with Salesforce’s share performance, so I think we’re at a point where investors are trying to figure out if there’s an opportunity for a bit of a rebound here,” Turrin said.
Looking for double-digit growth
Investors also want to see improvement in current remaining performance obligations at constant currency, a measure of expected revenue over the next year. In May, operating chief Robin Washington said she was expecting that number to be 9% for the August quarter.
“The longer that metric stays above 10%, the more confident investors are that this business can sustain a 10% growth profile for at least the next year,” Turrin said.
Analysts expect revenue growth to pick up very slightly in the fiscal third quarter, with consensus estimates currently at 9%, according to LSEG.
Salesforce declined to comment.
Expansion could come from outside. In May, Salesforce agreed to buy data management company Informatica for $8 billion. That’s by far the largest deal for Salesforce since the $27.1 billion purchase of Slack in 2021. In the interim, Salesforce hadn’t spent more than $2.5 billion on M&A, which has been a major growth driver in years past.
In late 2022, activist investors started going after Salesforce, dissatisfied with Benioff’s high-cost acquisitions, the company’s underperforming stock and its expanding workforce. The activists began agitating for a more favorable mix of sales and profit, and Salesforce responded by expanding margins sooner than it had planned.
One of the main instigators, Starboard Value, is back for more. In the second quarter, the firm, which first bought Salesforce stock in 2022, boosted its holding by 47%, according to a filing. In October 2024, Starboard’s Jeff Smith complimented Salesforce’s profitability improvements but said he still believed “there’s a lot more to go.”
Vulcan Value Partners is a Salesforce shareholder that’s comfortable with the software company’s plans. After picking up a stake in 2020, Vulcan added 345,000 shares in the second quarter, increasing its total holdings to $300 million.
“The thing that we focus on is the value per share of the business,” said Stephen Simmons, a portfolio manager at the firm. “That is continuing to grow. There’s nothing we’re seeing that’s saying this company is going away anytime soon.”
Analysts expect earnings per share to increase to $2.78 for the latest quarter, up from $2.56 a year earlier, according to LSEG.
Vulcan sold its Oracle shares in 2020, missing out on a steep rally that followed. Simmons said he’d buy again if the stock becomes discounted.
“Funny how things go around and come around,” Simmons said. “Benioff starts Salesforce as a cloud-native enterprise company, and Larry’s over at Oracle trying to transition his on-prem customers to the cloud.”
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