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Nevin Shetty, a former chief financial officer (CFO) at the Seattle startup indictment on charges of wire fraud in United States District Court in Seattle on May 17.
The indictment alleges that Shetty, 39, diverted approximately $35 million from the startup’s coffers to a cryptocurrency platform under his personal control. Shetty reportedly founded the platform, known as Hightower Treasury, shortly before he was informed of his impending departure as CFO in February 2022 due to concerns regarding his performance.
During the period from April 1 to April 12, 2022, Shetty allegedly transferred a large sum of $35,000,100 from his employers to an account linked to Hightower without the knowledge of anyone else within the company. The alleged purpose behind this transaction was for Hightower to allocate funds for investments within the decentralized finance (DeFi) sector of the cryptocurrency market. The arrangement bound Shetty’s company to receive a 6% interest rate, while the remaining interest would be retained by HighTower, potentially yielding considerable profits.
Prosecutors say the value of Shetty’s cryptocurrency investments began to decline rapidly and by May 13, 2022, the $35 million investment was essentially worthless. Upon discovering the embezzlement, the startup immediately reported the incident to the Federal Bureau of Investigation, which opened an investigation into the matter. If found guilty of wire fraud, Shetty could face a maximum sentence of 20 years in prison. He is expected to appear on May 25, 2023.
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In a similar case, Cooper Morgenthau, the former CFO of the African Gold Acquisition Corporation, was sentenced to three years in prison for embezzling more than $5 million from several special purpose acquisition companies (SPACs). Between June 2021 and August 2022, Morgenthau deposited approximately $1.2 million into his personal accounts and used the money to trade cryptocurrencies and “meme stocks,” resulting in significant losses.
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