Nevin Shetty, the former Fabric chief financial officer facing four counts of wire fraud, on Thursday pleaded not guilty to all four counts.
The U.S. District Court for the Western District of Washington released the 39-year-old Shetty on bond under pretrial supervision, and his jury trial is set for July 24. Other special conditions of his release included surrendering his passport, restricting travel to Western Washington and being barred from managing money for others.
Shetty was first hired by Seattle-based Fabric in March 2021, but told him a year later he would be let go due to job performance concerns. His departure from the company was set for June 2022. Right before Fabric told Shetty he was being let go, however, he and an associate had founded a cryptocurrency company called HighTower Treasury.
Despite helping to draft and disseminate an investment policy for Fabric that only approved certain conservative investments, according to the indictment, Shetty in April 2022 funneled $35 million from Fabric to HighTower after learning of his termination. He planned to give Fabric 6% of the interest on the investment, while HighTower would keep any additional profit. On May 13, 2022, after losing nearly all the money, Shetty told Fabric CEO Faisal Masud what he had done.
Cooper Offenbecher, Shetty's attorney, earlier this month told the Business Journal that he and Shetty had been in regular communication with prosecutors.
"As the CFO of his former employer, tasked with making investment decisions for its benefit, Mr. Shetty was personally devastated by these losses, which occurred as a result of a catastrophic crash in the cryptocurrency market in May 2022," Offenbecher said in the statement after Shetty's May 17 indictment. "We look forward to responding to these allegations in court."
Fabric allows clients to adjust their digital storefront without having to make complicated back-end changes. Its clients include GNC and Chico's. Fabric raised a $140 million Series C round in February 2022 that pushed the company's value to roughly $1.5 billion. The company raised more than $140 million across two rounds in 2021.
"We are thankful for and appreciate the hard work that the FBI and U.S. Attorney’s Office have done in helping resolve this matter," Fabric said in a statement to the Business Journal after Shetty's indictment. "While the amount taken is substantial, Fabric remains very well-funded with years of runway.”
