In a remarkable judicial outcome that illuminates the precarious nexus between startups and cryptocurrency, Nevin Shetty, the former chief financial officer of Seattle’s e-commerce startup Fabric, has been convicted on four counts of wire fraud.
Prosecutors allege that Shetty clandestinely misappropriated $35 million from Fabric’s financial resources to fuel his personal cryptocurrency trading endeavors, ultimately suffering catastrophic losses during the 2022 crypto market collapse.
The conviction, rendered by a federal jury in Seattle, underscores the escalating hazards posed by unregulated executive powers within rapidly growing technology enterprises.
Shetty, a resident of Mercer Island and a veteran finance executive, joined Fabric in 2021 as the company was experiencing frenetic growth.
Founded in 2019, Fabric specializes in providing e-commerce infrastructure, attracting substantial venture capital from prominent investors such as SoftBank and Norwest Venture Partners.
In his capacity as CFO, Shetty was granted extensive access to the company’s financial apparatus, which prosecutors claimed he exploited by diverting funds to personal accounts under the pretense of legitimate investments.
The Fraud Unveils
According to court documents issued by the U.S. Department of Justice, Shetty perpetrated the fraudulent scheme between September 2021 and April 2022, transferring funds in installments to various cryptocurrency platforms.
He allegedly employed these resources to engage in trading volatile assets, including Bitcoin and assorted tokens, via his separate business venture.
Following the crypto market’s dramatic downturn in May 2022—precipitated by circumstances such as the Terra-Luna collapse—Shetty’s investments were obliterated, resulting in substantial losses for Fabric.
The indictment, initially revealed in May 2023 by the U.S. Attorney’s Office for the Western District of Washington, meticulously outlined how Shetty fabricated documentation to obfuscate the illicit transfers.
“This defendant exploited his fiduciary position to pilfer millions from his employer to fuel his speculative cryptocurrency ventures,” stated U.S. Attorney Nick Brown, as reported by the Associated Press.
Fabric’s Troubled Ascent and Decline
Once heralded with a valuation exceeding $1 billion, Fabric was a star in the Seattle tech realm, delivering modular e-commerce solutions to brands such as GNC and Restoration Hardware.
Yet, internecine mismanagement coupled with the revelation of fraud precipitated its tragic decline. By late 2022, Fabric resorted to layoffs and was subsequently acquired by logistics company Clip in a hurried sell-off, according to reports from GeekWire.
The emergence of Shetty’s misdeeds occurred when Fabric’s auditors detected irregularities in the company’s cash flow. An ensuing internal investigation laid bare the unauthorized wire transfers, prompting the organization to notify federal authorities.
This case has elicited comparisons to other notorious frauds within the cryptocurrency sector, such as the FTX debacle, wherein executives like Sam Bankman-Fried faced analogous charges for the misappropriation of customer funds.
Trial Proceedings and Defense Claims
During the proceedings at the U.S. District Court in Seattle, prosecutors unveiled a trove of evidence, including bank statements, email exchanges, and testimonies from Fabric executives.
They posited that Shetty’s actions constituted intentional deception, rather than mere lapses in judgment. “He was fully aware of his actions,” prosecutor Seth Wilkinson asserted to the jury, as noted in coverage by The Washington Post.
In contrast, Shetty’s defense contended that the transfers were envisaged as short-term loans intended to seize cryptocurrency opportunities, with a commitment to reimburse Fabric. They referenced Shetty’s clean criminal record and his significant contributions to the organization.
Nevertheless, the jury dismissed this defense, arriving at a verdict after deliberations that lasted merely a few days, according to a recent update from GeekWire, published on November 13, 2025.
Wider Consequences for Startup Oversight
The conviction has reverberated throughout the startup sphere, inciting demands for more stringent financial governance. Industry specialists observe that numerous venture-backed entities extend considerable autonomy to CFOs, particularly during expansion phases.
“This case serves as a clarion call for boards to establish robust oversight mechanisms,” stated venture capitalist Rebecca Kaden of Union Square Ventures in an interview with Forbes, albeit not directly linked to this case.
Conversations on X (formerly Twitter) involving users such as @GeekWire and @WDWAnews spotlight the timing of the verdict amidst a resurgence in cryptocurrency markets, with Bitcoin eclipsing $100,000 in 2025.
Those sentiments echo outrage over executive malfeasance, with some users drawing parallels to fraudulent cases involving Cred LLC executives, who were sentenced in August 2025 for comparable wire fraud, as reported by the U.S. Department of Justice.
The Lure and Perils of Cryptocurrency
Shetty’s implosion epitomizes the enticing yet hazardous characteristics of cryptocurrency investments. The meteoric rise of the market in 2021-2022 lured numerous professionals into side enterprises, often blurring the line between personal and corporate finances.
Citing Cointelegraph, Shetty may face up to 20 years for each count upon sentencing, which remains forthcoming.
Experts from the Financial Times have dissected how the 2022 crypto downturn obliterated trillions in market value, exacerbating financial setbacks stemming from schemes akin to Shetty’s.
Fabric’s investors, including Stripes and Bessemer Venture Partners, reportedly recouped minimal amounts, intensifying the startup’s demise.
Lessons from Similar Cases
This incident is far from unique. Recent coverage from Decrypt reported a crypto casino CEO charged in August 2025 for squandering millions of investors’ dollars, mirroring Shetty’s misapplication of funds. Additionally, a purported blockchain startup founder was indicted in May 2025 for wire and securities fraud, according to Crypto Daily.
On X, discourse led by influencers such as @coffeebreak_YT reflects ongoing legal issues like the Squiggles NFT fraud, highlighting a recurrent pattern of prosecutions for crypto-associated wire fraud in 2025.
The FBI’s Washington Field Office also reported on a Bitcoin Fog operator sentenced in November 2024, indicating strengthened law enforcement efforts.
Enhancing Safeguards in Technology Finance
For those within the industry, the Shetty case raises pivotal questions regarding due diligence in the recruitment of C-suite officials. Implementing thorough background checks and segregating financial responsibilities could abate potential risks, as implied by analyses in the Harvard Business Review focusing on corporate fraud prevention.
As cryptocurrencies regain traction, startups must navigate the delicate balance between innovation and regulatory compliance. Shetty’s conviction, delineated in MyNorthwest’s portrayal of the Mercer Island man’s guilty determination, serves as a poignant cautionary narrative for CFOs enticed by high-stakes side ventures.
Adapting Regulatory Frameworks
Federal regulatory bodies, including the SEC, have intensified scrutiny of crypto-related malfeasance following the FTX episode. New directives from the Department of Justice in 2025 advocate for the prosecution of executives who misuse corporate resources for personal benefit.
Industry insights from Spectrum Local News revisited the initial 2023 indictment, elucidating how Shetty’s fraudulent actions prefaced broader market instability. As sentencing approaches, stakeholders remain vigilant for potential restitution orders that may set a precedent for future cases.
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