Ex-CFO Convicted for $35M Crypto Fraud After Terra Collapse

Nevin Shetty, the 41-year-old former CFO of a private software company, orchestrated one of the most brazen corporate theft cases in recent memory. As the chief financial officer, Shetty had drafted and implemented a conservative investment policy that explicitly required company funds to be invested only in FDIC-insured treasury and bank accounts. This policy was designed to protect the company’s assets through secure, low-risk financial instruments. However, federal prosecutors revealed that Shetty completely disregarded his own guidelines, secretly moving $35 million to HighTower Treasury, a crypto platform he had personally developed.

The timing of Shetty’s actions proved particularly damning. According to court evidence, he initiated the fund transfers just weeks after learning he would be terminated due to performance concerns. This sequence of events suggested a calculated attempt to capitalize on his remaining access to company resources before his impending departure. The wire fraud charges stemmed from his unauthorized electronic transfers of company funds, with the jury convicting him on all four counts after just 10 hours of deliberation.

Through his HighTower Treasury platform, Shetty deployed the stolen $35 million into various high-yield decentralized finance (DeFi) lending protocols. These investments represented the polar opposite of the conservative approach he had mandated for the company. DeFi protocols typically offer significantly higher returns than traditional financial instruments but carry substantially greater risk, including vulnerability to market volatility and protocol failures.

Initially, Shetty’s risky strategy appeared to pay off. During the first weeks of his scheme in April 2022, the DeFi investments generated over $133,000 in profits for himself and his business partner. This early success likely reinforced his confidence in the strategy, despite the fundamental breach of trust and violation of company policy. The profits demonstrated the potential returns available in the DeFi space during favorable market conditions, while simultaneously highlighting the temptation such returns presented to someone with unauthorized access to corporate funds.

The dramatic unraveling of Shetty’s scheme began in early May 2022 with the collapse of Terra’s algorithmic stablecoin. This event wiped out approximately $60 billion in value across the cryptocurrency market and triggered a cascading effect throughout the DeFi ecosystem. The Terra collapse represented one of the most significant failures in cryptocurrency history, exposing the extreme volatility and systemic risks inherent in many DeFi protocols.

Shetty’s $35 million investment portfolio, heavily exposed to these vulnerable DeFi lending protocols, plummeted toward worthlessness in the days following the Terra crash. By May 13, 2022, the investments had fallen to near-zero value, completely erasing both the principal amount and the earlier profits. The speed and severity of the collapse left no opportunity for damage control or recovery, transforming what had been a profitable venture into a catastrophic loss within days.

Faced with the complete evaporation of company funds, Shetty confessed his actions to two colleagues at the software firm shortly after the losses occurred. The company promptly fired him, ending his tenure under the cloud of massive financial misconduct. His confession came only after the funds had been lost, eliminating any possibility of recovery and leaving the company to absorb the $35 million loss.

The federal jury in Seattle found Shetty guilty on all four counts of wire fraud, reflecting the seriousness of his violations. He now awaits sentencing in February, facing a potential maximum prison term of 20 years. This case serves as a stark warning about the dangers of unauthorized corporate investments in high-risk cryptocurrency ventures, particularly when individuals bypass established financial controls and investment policies for personal gain.