Ex-CFO Sentenced to Two Years for $35M Crypto Fraud Scheme

Former CFO Sentenced to Two Years in Prison Over $35M Crypto Fraud

A former chief financial officer of a Seattle-based startup has been sentenced to two years in prison after secretly transferring $35 million in company funds to a cryptocurrency platform he controlled.

According to the United States Department of Justice, Nevin Shetty moved the funds in 2022 without the knowledge of company executives or board members.

The funds were transferred to a crypto platform called HighTower Treasury, which Shetty operated as a side business.

Funds Used for High-Risk DeFi Investments

Prosecutors said Shetty used the $35 million to invest in high-yield decentralized finance (DeFi) lending protocols, which were promising returns of 20% or more.

Initially, the strategy appeared profitable. In the first month, the investments generated about $133,000 in returns.

However, the situation quickly changed after the collapse of the Terra (LUNA) ecosystem triggered a wider downturn in the crypto market.

As the market crashed, the value of Shetty’s investments rapidly declined.

Crypto Market Crash Wiped Out the Funds

By May 13, 2022, the Department of Justice said the value of the investments had dropped to nearly zero.

After the funds were essentially gone, Shetty admitted what he had done to two fellow executives at the company.

He was immediately fired after the disclosure.

Authorities later charged him with wire fraud, citing the unauthorized transfer and misuse of corporate funds.

Conviction and Sentencing

Shetty was indicted in May 2023 and later convicted in November 2025 on four counts of wire fraud following a nine-day jury trial.

The court ordered that he:

• Serve two years in federal prison

• Pay restitution for the stolen funds

• Complete three years of supervised release after prison

The case highlights the legal risks surrounding unauthorized crypto investments made with corporate funds.

Case Emerged During a Turbulent Period for Crypto

Shetty’s actions occurred months before the collapse of the now-bankrupt crypto exchange FTX, which triggered one of the largest crises in the digital asset industry.

The downfall of the exchange led to the arrest and conviction of its former CEO Sam Bankman-Fried.

Bankman-Fried was sentenced to 25 years in prison in 2024 for fraud related to the misuse of customer funds. He has since filed an appeal, though the United States Court of Appeals for the Second Circuit has not yet issued a ruling.

Growing Scrutiny of Crypto Misconduct

The case reflects increasing enforcement efforts by US authorities targeting financial crimes involving cryptocurrency and decentralized finance platforms.

Regulators and law enforcement agencies have intensified investigations into fraud, misappropriation of funds, and unregistered crypto financial schemes as the digital asset industry continues to expand.

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