Washington Man Sentenced to 2 Years for Diverting $35M to Failed DeFi Platform

Core Insights - A Washington state man, Nevin Shetty, was sentenced to two years in federal prison for diverting $35 million from his employer to fund a personal decentralized finance venture that collapsed during the 2022 crypto market downturn [1][8] Company Impact - Shetty, as the chief financial officer of a private software company, was convicted of wire fraud after secretly transferring company funds into a crypto investment scheme linked to his side project, HighTower Treasury [3][4] - The company faced significant financial damage due to Shetty's actions, which nearly forced it to shut down and resulted in layoffs of about 60 employees as it attempted to stabilize operations following the missing funds [7][8] Investment Scheme Details - Shetty moved tens of millions of dollars from the company's accounts after learning of his job termination, despite having drafted a conservative investment policy that limited corporate fund usage [4] - The funds were invested in decentralized finance lending protocols promising annual returns of 20% or more, initially generating modest gains of approximately $133,000 in the first month [5][6] - However, the broader crypto market downturn, triggered by the collapse of the Terra ecosystem in May 2022, led to the value of HighTower's positions plummeting from around $35 million to nearly nothing [6]