In the ongoing fraud trial of FTX founder Sam Bankman-Fried, his defense lawyer vehemently countered former CEO Nishad Singh’s assertions that the cryptocurrency exchange’s spending on marketing and celebrity endorsements was extravagant, emphasizing that the decisions were strategic, not “reckless or frivolous.”
Testifying for a second day at the Manhattan federal court, the crypto firm’s ex-engineering head, Nishad Singh, was cross-examined regarding his previous statements about the company’s financial practices, Reuters detailed.
Despite being aware of a staggering $13 billion deficit in customer funds in September 2022, Singh maintained his belief that FTX could weather the storm, a point the defense is keen to leverage to demonstrate Bankman-Fried’s conviction that the company’s predicaments were surmountable.
Following FTX’s bankruptcy declaration on November 11, 2022, Mark Cohen, the defense attorney, probed Singh’s perspective on the potential merits of FTX’s brand investments.
Acknowledging both the benefits and costs, Singh’s testimony might bolster the defense’s stance that Bankman-Fried’s financial decisions, however contentious, were made in earnest pursuit of business growth, Reuters indicated.
Bankman-Fried’s trial, now in its third week, revolves around accusations of misappropriating billions in FTX customer funds for various investments, political contributions, and supporting his hedge fund, Alameda Research.
The defense highlighted an instance where Bankman-Fried invested in a celebrity-affiliated tequila brand, suggesting there was more strategic depth to these investments than previously presented. This comes after prosecutors criticized these moves as “reckless and frivolous.”
Highlighting the complexity of these investments, the defense referred to a lawsuit FTX’s current leadership filed against K5, attempting to recover $700 million. It alleged that a Bankman-Fried-directed entity improperly allocated $214 million of FTX’s funds to acquire a stake in Kendall Jenner’s 818 Tequila, despite the brand’s assets being worth a mere $2.94 million at that time. K5 has dismissed the lawsuit as baseless, per Reuters.
While admitting to errors in managing FTX, Bankman-Fried denies any intent of financial misconduct. His defense team hinted that he might testify to clarify his decisions, underscoring his commitment to transparency and truth in this high-stakes legal battle.
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