A former chief financial officer has been sentenced to two years in federal prison for embezzling $35 million from his company to invest in high-risk decentralized finance (DeFi) protocols, resulting in a near-total loss of the funds. Nevin Shetty, the ex-CFO of a Seattle-based software startup, was convicted on four counts of wire fraud following a nine-day jury trial in November 2025.
According to court documents and the U.S. Department of Justice, Shetty secretly transferred approximately $35 million in company funds over an 18-month period to a cryptocurrency platform he controlled, identified as the HighTower Treasury platform. He then deployed the stolen capital into "high-yield DeFi lending protocols that promised to generate returns of 20% or more." Shetty initially earned about $133,000 in the first month of his scheme.
The timing proved catastrophic. A significant portion of the embezzled funds was invested in protocols tied to the Terra blockchain ecosystem. In May 2022, the collapse of the TerraUSD (UST) stablecoin triggered a historic market downturn. The value of Shetty's investments plummeted to nearly zero by May 13, 2022, wiping out the entire $35 million.
Only after the funds were essentially gone did Shetty confess to two fellow executives. He was immediately fired. The fraud was originally uncovered during a routine external audit that found discrepancies between reported cash balances and actual bank statements.
U.S. District Judge John C. Coughenour sentenced Shetty to 24 months in prison, followed by three years of supervised release. The judge also ordered mandatory restitution of the stolen $35 million, though recovery prospects are considered extremely limited as the cryptocurrency was lost in DeFi protocol insolvencies.
The case sets a notable legal precedent, reinforcing that defendants are responsible for the full amount stolen regardless of how the funds are subsequently lost. The sentencing memorandum emphasized that the initial theft and breach of fiduciary duty constituted the primary crime, not the later investment losses.
The scandal has prompted widespread scrutiny of corporate treasury management policies. The victim company, though not named in reports, has overhauled its financial leadership and implemented blockchain analytics software to monitor crypto-related transactions. The case highlights critical vulnerabilities in internal controls, the opaque nature of DeFi, and the risks of yield-chasing in corporate finance.
