A Mercer Island man who once held the keys to a fast-growing Seattle-area startup’s bank accounts is headed to federal prison. On March 5, a judge sentenced former chief financial officer Nevin Shetty to two years behind bars after a jury found he secretly diverted about $35 million from his former employer into a personal cryptocurrency venture that quickly collapsed. Prosecutors say the transfers gutted the company’s cash runway and helped trigger layoffs for about 60 employees. The sentence follows a nine-day jury trial last November and a conviction on four counts of wire fraud.
What Prosecutors Said
According to the U.S. Attorney’s Office for the Western District of Washington, Shetty, 42, moved roughly $35,000,100 out of his employer’s accounts in April 2022 and was sentenced on March 5, 2026 to two years in prison, three years of supervised release and restitution for the full amount. The office said Shetty was convicted on November 7, 2025 after a nine-day jury trial and that Judge Tana Lin imposed a special condition barring him from serving as an officer or director of a company without probation approval.
How Investigators Say He Did It
Prosecutors say Shetty set up a side business called HighTower Treasury in early 2022, then ordered a series of wire transfers from a Chase branch near his Mercer Island home between April 1 and April 12, moving company cash into that account. From there, investigators say, he poured the funds into high-yield decentralized finance lending protocols that were advertising returns of about 20%.
The gamble initially went his way. The scheme reportedly generated roughly $133,000 in profit for Shetty and a partner in the first month. But by May 13, 2022, the positions had collapsed and the value was essentially gone. “You almost put the company out of business,” Judge Tana Lin told Shetty at sentencing, according to the press release.
Company And Local Fallout
Local reporting identified the employer as Fabric, a retail software provider that had recently closed several large funding rounds and hit a reported $1.5 billion valuation before the loss, according to GeekWire. That outlet reported Shetty joined Fabric as CFO in March 2021 and that the transfers forced the startup to cut staff, with prosecutors saying about 60 people ultimately lost their jobs.
Sentencing, Restitution And The Defense
CFO Dive published a statement from Fabric’s CEO saying the sentence “brings final resolution to a difficult chapter,” and reported that prosecutors had pushed for a nine-year prison term before Judge Lin settled on two years. The outlet also noted that Shetty’s attorney plans to appeal, arguing he genuinely believed he was making a safe investment and challenging the intent element of the wire fraud conviction.
Why This Is Back In The Headlines
The case resurfaced this week when the FBI Seattle field office spotlighted the sentencing on X, sharing details from the federal release alongside the bureau’s own comments. Law-firm roundups and legal analysts have flagged this case as part of a broader uptick in criminal prosecutions and civil enforcement tied to DeFi and other crypto platforms; see Gibson Dunn for a recent overview of that trend.
Legal Implications
Shetty’s conviction on four counts of wire fraud comes with a hefty financial and professional price tag. He was ordered to repay roughly $35 million and will be on supervised release for three years after prison, with the court limiting his ability to serve in corporate leadership roles unless his probation officer signs off. Local coverage summed up the charges and special conditions at sentencing; see KIRO 7 for a recap of the hearing.
For Seattle’s startup scene, the episode lands as a blunt reminder about the need for strict treasury controls and close board oversight when freshly raised venture capital hits company accounts. Coverage of Shetty’s November 2025 conviction provides the earlier chapter of the story as the company, its employees and the courts work to close this one.
