Dive Brief:

• Former Fabric CFO Nevin Shetty was convicted on four counts of wire fraud after misappropriating $35 million from his former employer related to a failed cryptocurrency investment scheme, the United States Attorney’s Office for the Western District of Washington said in a Thursday press release.
• Beginning April 1 to April 12, 2022, the former CFO secretly funneled company funds without the knowledge of other executives from Fabric — a retail software company —  to an account for HighTower Treasury, a cryptocurrency platform he owned. Shetty, 41, subsequently invested those funds in cryptocurrency positions with the aim of providing Fabric with interest, before the declining value of cryptocurrencies at the time reduced the investment to near-zero. 
• “This defendant exploited his position of power and trust in an attempt to profit from his crime and then lied to cover it up,” U.S. Attorney Charles Neil Floyd said in a statement included in the release. “I am proud of the work of our attorneys and support staff, who calmly and carefully helped the jury see through film of lies the defense used to try to justify what was, at its core, theft.”

Dive Insight:

Shetty was found guilty of taking and misusing company funds after a nine-day jury trial on Nov. 7, according to the release. Judge Tana Lin set his sentencing date for Feb. 11, 2026.

“We're disappointed in this result but will vigorously pursue an appeal,” J. Alex Little, managing member for Litson PLLC and attorney for Shetty, told CFO Dive in an emailed statement. “A corporate officer should not be prosecuted for making an investment with which his board later disagrees.”

Fabric, a retail software provider, first hired Shetty as its finance chief in March 2021 after the close of a $43 million Series A funding round, according to a press release at the time.

Shetty served in the role for approximately a year, helping to develop an investment policy for its funds as the business worked to continue to raise capital, before the company’s board “developed concerns” about his competency and he was informed by Fabric’s chief operating officer he could not continue in the role by March of 2022, CFO Dive previously reported.

Shetty, who had formed HighTower Treasury in February 2022, signed a “treasury account agreement” between HighTower and Fabric — on behalf of Fabric and without the knowledge of other company executives  — on March 31 of that year, according to the 2023 federal indictment. The agreement referred to the funds from Fabric as a treasury account and laid out terms for interest payments.

Beginning April 1 2022 — the day after the signing of that agreement — Shetty transferred about $35 million of funds from Fabric into the account and invested them into cryptocurrency positions which could have potentially generated up to 20% annual interest, according to the Thursday press release.  

“Shetty’s idea was that HighTower would pay Shetty’s company 6% of that interest and keep the remainder of any interest earned from the cryptocurrency investments for HighTower, which could have been substantial. As an owner of HighTower, Shetty stood to keep those profits,” the press release states. “In the first month, Shetty’s scheme earned roughly $133,000 of profit for himself and his HighTower business partner.”

Shortly after that first wire transfer, however, TerraUSD — then the third-largest cryptocurrency ecosystem — and its sister token Luna crashed in a so-called “crypto winter” beginning in May 2022, which eliminated $50 billion in valuation, the National Bureau of Economic Research said in an April 2023 working paper. The crash reduced the value of Shetty’s investment to near-zero.

“After the money was essentially gone, Shetty told two of his fellow executives what he had done. He was immediately fired,” the Thursday release states, with the company subsequently informing the FBI of the matter.

The U.S. Attorney’s Office declined to comment beyond its press release. Fabric did not immediately respond to requests for comment.