On 25 May 2017, Nevin Shetty, 39, was arraigned in U.S. District Court on the indictment of wire fraud and misusing funds and pleaded not guilty. He was the former CFO of Seattle-based startup Fabric when he allegedly diverted approximately $35 million to his crypto side business, HighTower. Fabric raised $140 million in a Series C funding round led by SoftBank and attained a valuation of $1.5 billion last year.
Shetty’s trial was set for July 24. He was released on an appearance bond under special conditions, including surrendering his passport and restrictions on managing money or making new investments.
Nevin Shetty was hired as the CFO of Fabric in March 2021. In March 2022, he was told he could not continue as CFO due to concerns about his performance, and shortly after that transformed the company’s funds into his own crypto side business.
According to the indictment, between April 1 and 12, 2022, Shetty transferred $35,000,100 to an account for HighTower. The money was supposed to be invested by HighTower in the DeFi segment. HighTower would pay Shetty’s company 6% interest and keep the remainder of any interest earned, which could have been substantial. As an owner of HighTower, Shetty stood to keep those profits. Shetty kept this investment in crypto secret from the board and other employees at the company where he worked.
However, the crypto investments soon began declining, and by May 13, 2022, the value of the $35 million investment was nearly zero.
Fabric reported the embezzlement to the FBI, who launched an investigation.
In response to the indictment, Shetty’s attorney, Cooper Offenbecher, expressed disagreement with the decision and highlighted that Shetty was personally devastated by the losses resulting from the cryptocurrency market crash in May 2022. Offenbecher stated that they looked forward to addressing the allegations in court.
