In a startling revelation, Nevin Shetty, former chief financial officer (CFO) of Bellevue-based e-commerce startup Fabric, was indicted on Wednesday for purportedly rerouting $35 million of company resources into a high-risk cryptocurrency venture that quickly collapsed to nearly zero value. A Mercer Island, Washington resident, Shetty joined Fabric in 2021, bringing a significant level of experience to the role.

Shetty spearheaded a corporate policy outlining the appropriate use of company funds. This policy endorsed conservative investments, specifically in fixed-income instruments payable in US dollars, as stated by the Western District of Washington U.S. Attorney’s Office in a recent press release. However, the indictment implies that Fabric’s upper management grew dissatisfied with Shetty’s performance, notifying him in March 2022 that he couldn’t sustain his CFO position.

Unauthorized Transfer and a Business in Ruins

Following the unfavorable news, Shetty allegedly moved $35 million from Fabric’s cash reserves into an account held by HighTower Treasury, a cryptocurrency platform he managed on the side. Unbeknownst to Fabric’s management, Shetty clandestinely orchestrated a “Treasury Account Agreement” between the two entities, providing a veil for the covert investment.

According to the indictment, the pact inferred that HighTower would remunerate Fabric a 6% interest on the investment, retaining any additional earnings. Shortly after, Shetty procured $28.8 million worth of TerraUSD (UST), an algorithmic stablecoin, just weeks before its value deviated from the US dollar, plummeting by 99.99%. The broader crypto-market collapse that followed erased the entire value of Shetty’s $35 million investment, reducing it to a mere fraction of its original worth.

This severe alleged breach of trust and misuse of company funds resulted in Shetty being indicted for wire fraud. This crime carries a potential penalty of up to 20 years in prison, emphasizing the gravity of the charges Shetty now faces. His actions serve as a cautionary tale, highlighting the risks and responsibilities inherent in the handling of company finances.