A former chief financial officer (CFO) was charged Wednesday after allegedly funneling $35 million in cash from his employer into a secret crypto investment that promptly crashed in value to near zero.
Nevin Shetty, a resident of Mercer Island, Washington, joined Bellevue-based e-commerce start-up Fabric in early 2021, according to a company announcement at the time.
Shetty helped create a new company policy that outlined how the company’s money should only be used for conservative investments in fixed-income instruments that are payable in US dollars, according to a new press release from the Western District of Washington US Attorney’s Office, which that does not name Dust.
The indictment indicates that the company’s top executives were concerned about Shetty’s performance and informed him in March 2022 that he could not continue as CFO.
Within days of hearing that news, Shetty allegedly transferred $35 million in Fabric’s cash to an account owned by HighTower Treasury, a crypto platform he ran as a sideline.
The former CFO secretly executed a “Treasury Account Agreement” between the two companies to facilitate the secret investment, which no one else at Fabric knew about, according to the indictment.
The agreement would state that HighTower Fabric would pay 6% interest on the investment and keep any additional interest it earned.
Shetty eventually raised $28.8 million in algorithmic stablecoin TerraUSD (UST) just a few weeks before the asset decoupled from the US dollar and crashed 99.99%. His total investment of $35 million plummeted to “almost zero” due to the ensuing crypto-wide implosion, according to the US Attorney’s Office.
Shetty was charged with telephony fraud, which carries a maximum sentence of 20 years in prison.
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