Ex-CFO sentenced after $35m crypto bet evaporates with Terra's collapse
Former CFO Nevin Shetty was convicted of fraud after surreptitiously transferring $35 million of the company's money to his DeFi platform, losing almost all of it in Terra's collapse in 2022. Here is how the scheme happened and what happens now.
The CFO moved company money to his personal DeFi platform
Former Seattle startup executive, Nevin Shetty, was convicted of four counts of wire fraud after a federal jury determined that he secretly diverted $35 million in company funds to his personal crypto venture. This audacious bet collapsed along with the implosion of Terra in 2022.
Shetty, 41, was CFO of Fabric, a privately held software and e-commerce company. According to prosecutors, he not only helped draft the company's conservative investment policy, which limited funds to FDIC-insured bank accounts, but then completely ignored it.
A few weeks after learning that he was going to be fired due to performance issues, Shetty quietly transferred tens of millions of dollars from Fabric Treasury to HighTower Treasury, a crypto investment platform he had created in parallel.
His plan was simple: channel the company's money into high-yield DeFi lending protocols that promised returns of around 20%, pay Fabric a modest 6%, and pocket the difference.
For a brief moment, it worked. In April 2022, HighTower generated over $133,000 in profit. But the DeFi ecosystem was already creaking, and Shetty's timing could not have been worse.
Earth's implosion turned the "second entry" into a total loss
In early May 2022, Terra's algorithmic stablecoin, UST, collapsed, dragging nearly $60 billion out of the crypto market in a matter of hours. HighTower's positions followed the nosedive. By 13 May, the company's $35 million had plummeted to almost nothing.
Once the money had evaporated, Shetty confessed to two colleagues and was immediately fired. The company alerted the FBI, triggering a federal investigation that would later reveal the full extent of the scheme.
A federal jury in Seattle deliberated for 10 hours before finding Shetty guilty. Prosecutors argued that he had knowingly abused his authority, concealed transfers from the board, and attempted to personally profit from the company's assets.
He now faces up to 20 years in prison, with sentencing scheduled for February.
The case highlights how quickly high-return DeFi strategies can turn into catastrophes, and how flaws in internal governance can amplify that risk.
With regulators pushing for tighter oversight, Shetty's downfall could become yet another warning in the long list of warning stories of crypto's most volatile era.
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