In a stunning verdict that underscores the volatile intersection of startups and cryptocurrency, Nevin Shetty, the former chief financial officer of Seattle-based e-commerce startup Fabric, was convicted on four counts of wire fraud. Prosecutors accused Shetty of secretly diverting $35 million from Fabric’s coffers to fund his personal cryptocurrency trading venture, ultimately losing the entire sum in the 2022 crypto market crash. The conviction, handed down by a federal jury in Seattle, highlights the growing risks of unchecked executive authority in high-growth tech firms.

Shetty, a Mercer Island resident and seasoned finance professional, joined Fabric in 2021 amid the company’s rapid expansion. Fabric, founded in 2019, specialized in e-commerce infrastructure, attracting significant venture capital from investors like SoftBank and Norwest Venture Partners. As CFO, Shetty had broad access to the company’s finances, which prosecutors said he abused by wiring funds to his own accounts under the guise of legitimate investments.

The Scheme Unravels

According to court documents from the U.S. Department of Justice, Shetty executed the fraud between September 2021 and April 2022, transferring money in tranches to cryptocurrency platforms. He reportedly used the funds to trade high-risk assets, including Bitcoin and other tokens, through his side business. When the crypto market plummeted in May 2022—triggered by events like the Terra-Luna collapse—Shetty’s investments evaporated, leaving Fabric with massive losses.

The indictment, first unsealed in May 2023 by the U.S. Attorney’s Office for the Western District of Washington, detailed how Shetty falsified records to conceal the transfers. “This defendant abused his position of trust to steal millions from his employer to fund his personal cryptocurrency speculation,” said U.S. Attorney Nick Brown at the time, as reported by the Associated Press.

Fabric’s Turbulent Rise and Fall

Fabric, once valued at over $1 billion, was a darling of the Seattle tech scene, providing modular e-commerce tools to brands like GNC and Restoration Hardware. However, internal mismanagement and the fraud revelation contributed to its downfall. By late 2022, Fabric laid off staff and was acquired by logistics firm Clip in a fire sale, according to reports from GeekWire.

Shetty’s actions came to light when Fabric’s auditors noticed discrepancies in the company’s cash reserves. An internal investigation revealed the unauthorized wires, prompting the company to alert federal authorities. The case drew parallels to other high-profile crypto frauds, such as the FTX collapse, where executives like Sam Bankman-Fried faced similar charges for misusing customer funds.

Trial Details and Defense Arguments

During the trial in U.S. District Court in Seattle, prosecutors presented evidence including bank records, email correspondence, and witness testimony from Fabric executives. They argued that Shetty’s moves were deliberate fraud, not mere poor judgment. “He knew exactly what he was doing,” prosecutor Seth Wilkinson told the jury, as quoted in coverage by The Washington Post.

Shetty’s defense team countered that the transfers were intended as short-term loans to capitalize on crypto opportunities, with plans to repay Fabric. They pointed to Shetty’s lack of prior criminal history and his contributions to the company. However, the jury rejected this narrative, convicting him after deliberations that lasted just a few days, per a recent update from GeekWire published on November 13, 2025.

Broader Implications for Startup Governance

The conviction has sent ripples through the startup ecosystem, prompting calls for stricter financial controls. Industry experts note that many venture-backed firms grant CFOs significant autonomy, especially during growth phases. “This case is a wake-up call for boards to implement robust oversight,” said venture capitalist Rebecca Kaden of Union Square Ventures in an interview with Forbes, though not directly tied to this case.

Posts on X (formerly Twitter) from users like @GeekWire and @WDWAnews highlighted the verdict’s timing amid a resurgence in crypto markets, with Bitcoin surpassing $100,000 in 2025. Sentiment on the platform reflects outrage over executive misconduct, with some drawing comparisons to other fraud cases like the Cred LLC executives sentenced in August 2025 for similar wire fraud, as reported by the U.S. Department of Justice.

Crypto’s Allure and Risks Exposed

Shetty’s downfall exemplifies the seductive yet perilous nature of cryptocurrency investments. In 2021-2022, the market’s boom lured many professionals into side ventures, often blurring lines between personal and corporate finances. According to Cointelegraph, Shetty faced up to 20 years per count upon conviction, with sentencing pending.

Experts from the Financial Times have analyzed how the 2022 crypto winter wiped out trillions in value, amplifying losses from schemes like Shetty’s. Fabric’s investors, including Stripes and Bessemer Venture Partners, reportedly recovered little, exacerbating the startup’s collapse.

Lessons from Parallel Cases

This isn’t an isolated incident. Recent news from Decrypt covered a crypto casino CEO charged in August 2025 for gambling away investors’ millions, echoing Shetty’s misuse of funds. Similarly, a fake blockchain startup founder was indicted in May 2025 for wire and securities fraud, as per Crypto Daily.

On X, discussions by influencers like @coffeebreak_YT reference ongoing cases such as Squiggles NFT fraud, underscoring a pattern of crypto-related wire fraud prosecutions in 2025. The FBI’s Washington Field Office also posted about a Bitcoin Fog operator sentenced in November 2024, signaling intensified enforcement.

Future Safeguards in Tech Finance

For industry insiders, the Shetty case raises questions about due diligence in hiring C-suite executives. Background checks and segregated financial duties could mitigate risks, as suggested by Harvard Business Review analyses of corporate fraud.

As crypto rebounds, startups must balance innovation with compliance. Shetty’s conviction, detailed in MyNorthwest’s coverage of the Mercer Island man’s guilty verdict, serves as a cautionary tale for CFOs tempted by high-stakes side bets.

Evolving Regulatory Landscape

Federal regulators, including the SEC, have ramped up scrutiny of crypto-related fraud post-FTX. In 2025, new guidelines from the Department of Justice emphasize prosecuting executives who misuse company funds for personal gain.

Industry reports from Spectrum Local News revisited the initial 2023 indictment, noting how Shetty’s actions preceded broader market turmoil. With sentencing approaching, stakeholders await potential restitution orders that could influence future cases.