A former chief financial officer (CFO) was indicted on Wednesday after he allegedly funneled $35 million worth of his employer’s cash into a secret crypto investment that promptly crashed in value to almost zero.
Nevin Shetty, a resident of Mercer Island, Washington, joined the Bellevue-based e-commerce start-up Fabric in early 2021, according to an announcement from the company at the time.
Shetty helped draft a new corporate policy that outlined how the company’s cash should only be used on conservative investments in fixed-income instruments payable in US dollars, according to a new press release from the Western District of Washington U.S. Attorney’s Office, which doesn’t name Fabric.
The indictment indicates that the company’s top executives were concerned with Shetty’s performance and informed him in March 2022 that he could not continue as CFO.
Within a few days of hearing that news, Shetty allegedly transferred $35 million worth of Fabric’s cash into an account owned by HighTower Treasury, a crypto platform he ran as a side business.
The former CFO secretly executed a “Treasury Account Agreement” between the two companies to facilitate the covert investment, which no one else at Fabric knew about, according to the indictment.
The agreement allegedly indicated that HighTower would pay Fabric 6% interest on the investment and keep any additional interest it earned.
Shetty ultimately acquired $28.8 million worth of the algorithmic stablecoin TerraUSD (UST), only a few weeks before the asset de-pegged from the US dollar and crashed by 99.99%. His total $35 million investment plummeted to “nearly zero” due to the subsequent crypto-wide implosion, according to U.S. Attorney’s Office.
Shetty was indicted for wire fraud, which is punishable by up to 20 years in prison.
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