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
Armis CEO Yevgeny Dibrov and CTO Nadir Izrael.
Courtesy: Armis
Cybersecurity startup Armis has raised $435 million in a funding round that values the company at $6.1 billion.
“The need for what Armis is doing and what we are building, in this cyber exposure management and security platform, is just increasing,” CEO and co-founder Yevgeny Dibrov told CNBC. There’s “very unique and huge demand right now, and we are continuing to grow.”
Goldman Sachs Alternatives’ growth equity fund anchored the investment, with participation from CapitalG, a venture arm of Alphabet. The security firm brought on Evolution Equity Partners as a new investor.
Armis helps businesses secure and manage internet-connected devices and protect them against cyber threats. The company chose Goldman’s growth fund due to its strong track record helping companies accelerate growth toward initial public offerings, Dibrov said.
“This is the partner for us to go to the next stage and continue to build here a real generational business to get to the Hall of Fame of cyber and SaaS businesses,” he said.
In September, Bloomberg reported that the company was exploring as much as seven stake offers. Dibrov told CNBC the funding round was an outcome of those talks.
Founded in 2016, Armis in August said it surpassed $300 million in annual recurring revenues. The California-based company achieved that milestone less than a year after topping $200 million in ARR.
Armis raised $200 million in an October 2024 funding round with General Catalyst and Alkeon Capital. Previous backers have included Sequioa Capital and Bain Capital Ventures. Armis also raised $100 million in a secondary offering in July.
Dibrov said Armis is aiming for an IPO at the end of 2026 or early 2027, but he said he’s in no rush and is waiting on “market conditions.” The company’s primary goal is to hit $1 billion in annual recurring revenue, he said.
“Going public will be before that,” he said.
WATCH: Tech meets policy: Cybersecurity collaboration necessary in the era AI, says Google engineer
Rick Smith, CEO of Axon Enterprises.
Adam Jeffery | CNBC
Axon Enterprise‘s stock plummeted 17% after the TASER maker missed Wall Street’s third-quarter profit expectations as it grapples with tariff constraints.
Adjusted earnings totaled $1.17 per share adj., falling short of a $1.52 per share forecast from LSEG. Adjusted gross margins fell 50 basis points from a year ago to 62.7%, which Axon attributed to tariff impacts.
Axon’s connected devices business, which includes its TASER and counter drone equipment, felt the biggest pinch during the first full quarter with tariffs. The business segment accounted for over $405 million in revenues, increasing 24% year over year.
“As long as tariffs stay in place, I view that as sort of a one-time adjustment,” finance chief Brittany Bagley said during the earnings call. “Now that’s baked into the gross margins.”
Bagley expects growth in the company’s software business to eventually offset margin losses long-term. Software and services revenues jumped 41% from a year ago to $305 million.
Total revenues grew 31% from a year ago to $711 million, topping the $704 million expected by analysts polled by LSEG. The U.S. accounted for 84% of sales.
The Arizona-based company reported a net loss of $2.2 million, a loss of 3 cents per share, versus net income of $67 million, or 86 cents per share in the year-ago period.
Axon lifted its full-year revenue outlook to $2.74 billion, from between $2.65 billion and $2.73 billion. FactSet analysts expected $2.72 billion at the midpoint.
The company expects revenues between $750 million and $755 million during the fourth quarter, which was above LSEG analyst expectations of $746 million.
Along with the results, Axon said it is acquiring Carbyne in a deal that values the emergency communications platform at $625 million. The deal is expected to close next year in the first quarter.
Axon shares have jumped more than 60% over the last year and are up 18% year to date as demand for its security tools accelerates.
“We are building an elite business that is still nowhere near its ultimate potential, and we are doing it with a team that is rapidly bought into the mission,” said Axon’s president Josh Isner on the earnings call.
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