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 venture that ultimately collapsed during the 2022 crypto market downturn.
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 downturn following the Terra ecosystem crash.
- The losses severely impacted the company, triggering layoffs and nearly forcing the business to shut down.
Nevin Shetty, 42, was convicted of wire fraud in November after prosecutors showed he secretly transferred company funds into a crypto investment scheme tied 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 Job Termination
According to the US Department of Justice, Shetty drafted a conservative investment policy for the firm that limited how corporate funds could be used.
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 concerns.
The money was routed to HighTower Treasury, where Shetty and a business partner invested heavily in decentralized finance lending protocols promising annual returns of 20% or more.
Prosecutors said Shetty intended to return a fixed payment to the company while keeping the remainder of any profits generated by the crypto strategy.
Initially, the scheme produced modest gains. Court filings show the operation generated roughly $133,000 in its first month.
However, the broader crypto market soon entered a steep downturn following the collapse of the Terra ecosystem in May 2022.
As the market fell, the value of HighTower’s positions rapidly deteriorated. The investments tied to Shetty’s strategy plunged from approximately $35 million to nearly nothing during the subsequent crypto winter.
After the losses became clear, Shetty admitted his actions to colleagues at the company. He was later dismissed from his role.
JUST IN: NEVIN SHETTY SENTENCED TO 2 YEARS IN PRISON FOR $35M DEFI THEFT
Shetty secretly moved $35 million in company funds to his side business HighTower Treasury
Those funds were then invested in high-yield DeFi lending protocols that promised returns of 20% or more.… pic.twitter.com/VIrKyXYp2N— BSCN (@BSCNews) March 6, 2026
During sentencing, US District Judge Tana Lin said the incident inflicted serious damage on the business. According to the court, the company faced “significant and severe effects” from the losses and was nearly forced to shut down.
The financial damage also triggered layoffs, with about 60 employees losing their jobs as the company attempted to stabilize operations following the missing funds.
Federal prosecutors had requested 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 Ordered to Pay $35M Restitution After DeFi Fraud
In addition to prison time, Shetty was ordered to pay $35,000,100 in restitution. After completing his sentence, he will remain under supervised release for three years.
Judge Lin also imposed 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 teenagers from California faced serious felony charges after authorities say they traveled hundreds of miles to carry out a violent home invasion in Scottsdale, Arizona, in a bid to obtain cryptocurrency believed to be worth $66 million.
The case came amid a broader rise in so-called wrench attacks, physical assaults aimed at forcing crypto holders to hand over private keys.
Security researcher Jameson Lopp’s public database lists roughly 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.
The post Washington Man Sentenced to 2 Years for Diverting $35M to Failed DeFi Platform appeared first on Cryptonews.
