Seattle Court Sentences Former CFO for Unauthorized $35M Cryptocurrency Gamble

Nevin Shetty, the former senior executive of startup Fabric, has been sentenced to two years in prison for a $35 million wire fraud scheme involving a high-risk cryptocurrency gamble.

A Secret Side-Business

A former chief financial officer’s (CFO) attempt to turn his employer’s treasury into a personal cryptocurrency “ yield farm” has ended in a federal prison sentence. Nevin Shetty, the 42-year-old former CFO of Seattle e-commerce unicorn Fabric, was sentenced March 5 to two years in prison for wire fraud after secretly funneling $35 million into a decentralized finance ( DeFi) scheme that collapsed in less than a month.

According to a press release by the U.S. Attorney’s Office, Shetty helped draft a strict, conservative investment policy for the company’s hundreds of millions in venture capital. However, in early 2022, Shetty launched a side business called HighTower Treasury. Prosecutors say Shetty’s plan was a classic crypto arbitrage.

After moving $35,000,100 of Fabric’s cash into HighTower, Shetty funneled the funds into DeFi lending protocols—specifically the Terra/Luna ecosystem—which at the time offered annual percentage yields of 20% or more. Shetty planned to pay Fabric a modest 6% “safe” return while pocketing the 14% surplus for himself and his partner.

In the first 30 days, the scheme appeared to work, generating roughly $133,000 in personal profit. However, the gamble turned into a nightmare in May 2022 when the TerraUSD (UST) stablecoin de-pegged, triggering a $40 billion wipeout. Within days, the $35 million Fabric treasury held by Shetty had plummeted in value to virtually nothing.

“The loss had significant and severe effects on the company,” U.S. District Judge Tana Lin said during the sentencing. “Your actions threw into complete turmoil the lives of those 60 people (who were laid off) … You almost put the company out of business … You were playing with money that wasn’t yours.”

The financial hole left by the failed crypto bet forced Fabric to lay off 60 employees, a point the prosecution emphasized as “irrevocable damage” caused by Shetty’s greed.

Despite the defense’s argument that Shetty was merely making an “unauthorized investment” rather than committing fraud, the jury found that his “web of lies”—including hiding the transfers from the board and other executives—constituted criminal activity.

“He chose high-yield DeFi lending protocols that promised 20% returns,” said First Assistant U.S. Attorney Charles Neil Floyd. “His lies did not fool the jury.”

Shetty’s case marks one of the most significant criminal sentencings involving corporate treasury mismanagement and the volatile DeFi sector to date.

FAQ ❓

• What was Nevin Shetty convicted of? He was sentenced to two years in prison for wire fraud after misappropriating $35 million from his employer.
• How did Shetty attempt to profit from the company’s funds? He funneled the money into a personal cryptocurrency yield farming scheme via a side business called HighTower Treasury.
• What was the outcome of Shetty’s investment strategy? The strategy collapsed when the TerraUSD stablecoin de-pegged, leading to almost total loss of the invested funds.
• What impact did Shetty’s actions have on the company? Fabric was forced to lay off 60 employees due to the financial turmoil caused by Shetty’s fraudulent activities.