Former CFO indicted for diverting $35 million into cryptocurrency venture

Nevin Shetty, a former chief financial officer (CFO) at a startup company in Seattle, was indicted May 17 in U.S. District Court in Seattle on charges of wire fraud.

The indictment alleges that 39-year-old Shetty diverted approximately $35 million from the startup company’s coffers to a cryptocurrency platform under his personal control. Reportedly, Shetty established this platform, known as HighTower Treasury, in February 2022, shortly before being notified of his imminent departure as CFO over performance concerns.

During the period from April 1 to April 12, 2022, Shetty allegedly transferred a substantial amount of $35,000,100 from his employers to an account linked to HighTower, without the knowledge of any other person within the company. The purported purpose behind this transaction was for HighTower to allocate the funds to investments within the decentralized finance (DeFi) sector of the cryptocurrency market. This arrangement entailed Shetty’s company receiving a 6% interest rate, with the remaining interest to be retained by HighTower, potentially generating significant profits.

Prosecutors say the value of Shetty’s cryptocurrency investments began to decline rapidly, and by May 13, 2022, the $35 million investment had become essentially worthless. When the startup company discovered the embezzlement, it immediately reported the incident to the Federal Bureau of Investigation (FBI), prompting an investigation into the matter. If Shetty is convicted of wire fraud, she could face a maximum prison sentence of 20 years. He is expected to be charged on May 25, 2023.

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In a similar case, Cooper Morgenthau, the former CFO of African Gold Acquisition Corporation (AGAC), was sentenced to three years in prison for embezzling more than $5 million from multiple Special Purpose Acquisition Companies (SPACs). Between June 2021 and August 2022, Morgenthau transferred approximately $1.2 million to his personal accounts and used the funds to trade cryptocurrencies and “meme stocks”, resulting in significant losses.

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