Wednesday, September 27, 2023

Former CFO indicted for diverting $35M to cryptocurrency enterprise

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Nevin Shetty, a former chief monetary officer (CFO) at a Seattle startup, was indicted on Could 17 in the US District Court docket in Seattle on prices of wire fraud. 

The indictment alleges that Shetty, 39, diverted roughly $35 million from the startup’s coffers to a cryptocurrency platform below his private management. Shetty reportedly established this platform, often called HighTower Treasury, in February 2022 shortly earlier than being notified of his impending departure as CFO on account of considerations relating to his efficiency. 

Through the interval from April 1 to April 12, 2022, Shetty allegedly transferred a considerable quantity of $35,000,100 from his employers to an account linked to HighTower with out the information of every other people inside the firm. The alleged goal behind this transaction was for HighTower to allocate the funds towards investments inside the decentralized finance (DeFi) sector of the cryptocurrency market. This association entailed Shetty’s firm receiving a 6% rate of interest, whereas the remaining curiosity could be retained by HighTower, doubtlessly yielding appreciable earnings.

Prosecutors say that the worth of Shetty’s cryptocurrency investments started to say no quickly, and by Could 13, 2022, the $35-million funding had basically grow to be nugatory. Upon discovering the embezzlement, the startup promptly reported the incident to the Federal Bureau of Investigation, triggering an investigation into the matter. If convicted of wire fraud, Shetty might face a most sentence of 20 years in jail. He’s anticipated to be arraigned on Could 25, 2023.

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In an analogous case, Cooper Morgenthau, the former CFO of African Gold Acquisition Company, was sentenced to a few years in jail for embezzling over $5 million from a number of particular goal acquisition corporations (SPACs). Between June 2021 and August 2022, Morgenthau wired round $1.2 million to his private accounts and used the cash to commerce cryptocurrencies and “meme shares,” leading to important losses.

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