Crypto Journalist
Amin Ayan
Crypto Journalist
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A Washington state man has been sentenced to two years in federal prison after diverting $35 million from his employer to fund a personal decentralized finance company that ultimately collapsed during the 2022 crypto market crash.
Key takeaways:
- A former Washington CFO was sentenced to two years in prison for diverting $35 million in company funds into a failed DeFi investment scheme.
- The crypto strategy collapsed during the 2022 market crash following the collapse of the Terra ecosystem.
- The losses hit the company hard, leading to layoffs and nearly forcing the business to close.
Nevin Shetty, 42, was convicted of wire fraud in November after prosecutors showed he secretly transferred company funds to a cryptocurrency investment scheme linked to his side project, HighTower Treasury.
The funds belonged to a private software company where Shetty served as chief financial officer.
Prosecutors say CFO diverted funds after learning of firing
According to the US Department of Justice, Shetty drafted a conservative investment policy for the company that limited the use of corporate funds.
Despite those internal guidelines, he moved tens of millions of dollars from the company’s accounts after learning in April 2022 that his position would be terminated due to performance issues.
The money was sent to HighTower Treasury, where Shetty and a business partner invested heavily in decentralized finance lending protocols that promised annual returns of 20% or more.
Prosecutors said Shetty intended to return a fixed payment to the company and keep the rest of the profits generated by the crypto strategy.
Initially, the plan produced modest profits. Court documents show the operation generated approximately $133,000 in its first month.
However, the broader crypto market soon entered a sharp decline following the collapse of the Terra ecosystem in May 2022.
As the market fell, the value of HighTower’s holdings deteriorated rapidly. Investments linked to Shetty’s strategy fell from approximately $35 million to almost nothing during the following crypto winter.
After the losses became clear, Shetty admitted his actions to his company colleagues. He was later fired from his position.
During sentencing, U.S. District Judge Tana Lin said the incident caused serious damage to the company. According to the court, the company faced “significant and serious effects” from the losses and was on the verge of being forced to close.
The financial damage also led to layoffs, with around 60 employees losing their jobs as the company tried to stabilize its operations following a lack of funds.
Federal prosecutors had sought a nine-year prison sentence, arguing that Shetty’s actions involved deception and caused lasting harm to the company and its staff. The court ultimately imposed a shorter sentence of two years.
Washington Man Sentenced to Pay $35M Restitution After DeFi Fraud
In addition to the prison sentence, Shetty was ordered to pay $35,000,100 in restitution. Once his sentence is complete, he will remain on supervised release for three years.
Judge Lin also placed restrictions on Shetty’s future employment, prohibiting him from serving as an officer or director of a company without approval from the probation office.
Last month, two California teenagers faced serious felony charges after authorities said they traveled hundreds of miles to carry out a violent home invasion in Scottsdale, Arizona, in an attempt to obtain cryptocurrency believed to be worth $66 million.
The case came amid a broader rise in so-called wrench attacks, physical attacks aimed at forcing cryptocurrency holders to hand over private keys.
Security researcher Jameson Lopp’s public database lists approximately 70 such incidents in 2025, a sharp increase from the previous year.
Security analysts say criminals are increasingly using leaked personal data to identify targets and recruiting young perpetrators online to reduce traceability.
