Live·Started Sep 1, 2017

The FTX Empire: From Crypto King to Federal Prison

A comprehensive look at the rise of Sam Bankman-Fried’s crypto empire, the $8 billion fraud that brought it down, and the ongoing 2026 recovery efforts to repay millions of victims.

by Timelined

Curator · 2 timelines

#ftx #crypto #bankruptcy #sam-bankman-fried #alameda-research

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May 2

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May 2019

Thu, May 2

Key Moment

Nishad Singh and the "Allow Negative" Backdoor

A few lines of code create an $8 billion loophole

As FTX prepares for its global launch, Nishad Singh—a former Facebook engineer and high school friend of SBF's brother—joins Gary Wang to build the exchange's technical engine. Together, they hard-code a secret feature into the platform's risk management software: the "allow_negative" flag . This flag essentially grants Alameda Research a "God Mode" status, exempting it from the automated liquidation process that applies to all other FTX users. While the public is told that FTX has the most sophisticated real-time risk engine in crypto, this backdoor allows Alameda to borrow an unlimited amount of customer funds without collateral. Singh's role as the "architect" of this system makes him one of only four people (alongside SBF, Wang, and Ellison) who knows the exchange is structurally insolvent from day one.

→ www.sec.gov

Oct 2024

Wed, Oct 30

Nishad Singh Avoids Prison Time

Judge cites "remarkable" cooperation and limited role in the core fraud

Former FTX Engineering Chief Nishad Singh is sentenced to three years of supervised release and no prison time, making him the first of the cooperating executives to fully avoid incarceration. While Singh pleaded guilty to six felony counts—including wire fraud and money laundering—U.S. District Judge Lewis Kaplan noted that his involvement was "much more limited" than that of SBF or Caroline Ellison. The court was particularly moved by the "extraordinary" speed and depth of Singh's cooperation. Prosecutors revealed that Singh met with them more than 24 times and provided evidence of criminal conduct that the government "may have never discovered" without him. This included detailed accounts of SBF’s excessive and reckless spending of customer funds on celebrity endorsements and political "straw donor" schemes. Defense attorneys successfully argued that Singh only became aware of the massive $8 billion hole in September 2022—just two months before the collapse—and was immediately suicidal upon learning the truth. In addition to the supervised release, Singh was ordered to forfeit $11.2 billion in assets, including his interest in a home and shares in the AI startup Anthropic.

→ www.bankingdive.com

Dec 2025

Fri, Dec 19

The SEC secures final civil judgments against Ellison, Wang, and Singh

The civil enforcement chapter catches up with the criminal one

The SEC files final consent judgments against Ellison, Wang, and Singh. They are permanently banned from serving as officers or directors of public companies and face lifetime trading bans.

→ www.sec.gov

End of timeline · 3 entries