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Former CFO indicted for diverting $35M to cryptocurrency venture

In the event of a conviction for wire fraud, Nevin Shetty could face up to 20 years in prison.

Nevin Shetty, a former Chief Financial Officer (CFO) at a Seattle start-up company, was indicted on May 17 in the U.S. District Court in Seattle on charges of wire fraud. 

The indictment alleges that Shetty, 39, diverted approximately $35 million from the start-up company's coffers to a cryptocurrency platform under his personal control. Shetty reportedly established this platform, known as HighTower Treasury, in February 2022, shortly before being notified of his impending departure as CFO due to concerns regarding his performance. 

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 individuals within the company. The alleged purpose behind this transaction was for HighTower to allocate the funds towards investments within the decentralized finance (DeFi) sector of the cryptocurrency market. This arrangement entailed Shetty's company to receive a 6% interest rate, while the remaining interest would be retained by HighTower, potentially yielding considerable profits.  

Prosecutors say that the value of Shetty's cryptocurrency investments began to decline rapidly, and by May 13, 2022, the $35 million investment had essentially become worthless. Upon discovering the embezzlement, the start-up company promptly reported the incident to the Federal Bureau of Investigation (FBI), triggering an investigation into the matter. If convicted of wire fraud, Shetty could face a maximum sentence of 20 years in prison. He is expected to be arraigned on May 25, 2023.

Related: State regulators crack down on fraudulent cryptos promoted as 'Elon Musk AI Token' and 'TruthGPT Coin'

In a similar case, Cooper Morgenthau, the former CFO of African Gold Acquisition Corporation (AGAC), was sentenced to three years in prison for embezzling over $5 million from multiple special purpose acquisition companies (SPACs). Between June 2021 and August 2022, Morgenthau wired around $1.2 million to his personal accounts and used the money to trade cryptocurrencies and "meme stocks," resulting in significant losses.

Magazine: 4 clever crypto scams to beware — Dubai OTC trader Amin Rad

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