The threat of a 20-year incarceration term is on the horizon for Nevin Shetty in case he’s found guilty of wire fraud.

Nevin Shetty, 39, a former financial head at a Seattle-based startup, found himself indicted on charges of wire fraud on May 17 at the United States District Court in Seattle. The indictment alleges that Shetty misdirected an estimated $35 million from his ex-employer’s reserves to his own cryptocurrency entity. Shetty is believed to have set up this platform, dubbed HighTower Treasury, in February 2022, right around the time he was informed of his impending dismissal as CFO, stemming from performance-related concerns.

In a covert operation spanning April 1 to April 12, 2022, Shetty is accused of siphoning off a hefty amount of $35,000,100 from his employer’s account into one linked with HighTower. The presumed motive behind this substantial transfer was to funnel these funds into the decentralized finance (DeFi) arena of the digital currency market. In this arrangement, a 6% interest rate was slated to be credited to Shetty’s company, with the remaining interest accruing to HighTower, potentially amassing hefty profits.

However, prosecutors assert that Shetty’s foray into cryptocurrency took a disastrous nosedive. By May 13, 2022, the initially hefty $35-million investment had virtually evaporated. The startup, after uncovering the financial irregularity, immediately alerted the Federal Bureau of Investigation, sparking a probe into the matter. If convicted of wire fraud, Shetty could potentially be staring at a 20-year prison term. His court hearing is scheduled for May 25, 2023.

In a similar vein, Cooper Morgenthau, formerly holding the CFO position at African Gold Acquisition Corporation, was handed a three-year prison sentence for pilfering in excess of $5 million from multiple special purpose acquisition companies (SPACs). Morgenthau is reported to have wired roughly $1.2 million to his private accounts from June 2021 to August 2022, subsequently squandering the money in cryptocurrency and “meme stocks” trades, culminating in a substantial financial loss.

These incidents underline the potential pitfalls of unchecked financial activities within organizations. They emphasize the need for stringent internal control mechanisms and financial audits, particularly in startups and similar entities where sizable amounts of money can be manipulated with relative ease. Moreover, the quick depreciation in Shetty’s investment portfolio sheds light on the inherent risks and volatility associated with the cryptocurrency and DeFi markets. Investors are cautioned to thoroughly comprehend these risks and undertake comprehensive due diligence before committing substantial investments to these sectors.