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- 1 The Seattle-based startup’s former Chief Financial Officer (CFO) was charged with wire fraud.
- 2 He allegedly took $35 million of his employer’s money and invested it in cryptocurrency.
Former CFO of software solutions provider Fabric was charged with four counts of wire fraud. He, without informing the company or the employee, invested money in his side business of cryptocurrency. The CFO took $35 million from employees, invested, and lost it in a crypto crash. This is all declared in the allegation made by the Grand Jury on Wednesday.
Nevin Shetty was hired in March 2021 as CFO of Fabric. This company makes software platforms for retail commerce. About a year later, in March 2022, he was informed about job performance concerns. Knowing these issues, he took the money and transferred it to the Hightower Treasury. This is a crypto platform controlled by him as a side business.
Crypto Crash is the Reason Behind Loss
As the crypto market crashed in May 2022, the value of the funds became zero. The main reason for the market crash is the bankruptcy of one of the largest global cryptocurrency exchanges, FTX. Macroeconomic factors such as interest rates and inflation are also responsible for the downfall. The market crash caused a lot of pain and widespread panic.
According to the allegations, Fabric adopted a policy in March 2022 to invest its cash in conservative investment types. Nevin planned to pay 6% interest to Fabric on its investment. He also planned to keep the additional returns for the High Tower.
After the allegations were made, Cooper Offenbecher, the attorney of Shetty, said that he and his client did not agree with the decisions made. He said that as the company’s CFO, he was tasked to make investment decisions for the company’s benefit.
Fabric is Cooperating With Investigation
Since May 2022, Fabric has been fully cooperating with the court in the investigation of the Nevin Shetty case of misusing the $35 million of fabric funds. The company also thanked the FBI and US Attorney’s Office to help resolve the matter.
Fabric was valued at $1.5 billion last year after raising $140 million in a Series C round led by SoftBank. Series C funding is one of the stages in the capital raising process for a startup. To date, Fabric has raised nearly $300 million. Its revenue hit $8.7 million in 2023.
Investors should always be alert to the market to avoid losses. They should follow the predictions made by analysts to avoid heavy losses. The global cryptocurrency exchanges can trigger a huge sell-off in the market but can also reduce liquidity. This is one thing learned from the crypto market crash in 2022 and also from the case of fraud by the CFO of Fabric.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
