Nevin Shetty, the former CFO of Seattle e-commerce startup Fabric charged with funneling company funds to his crypto business, pled not guilty to all four charges of fraud in his first court appearance on Thursday in U.S. District Court in Seattle.
Shetty was released on an appearance bond under special conditions, including the surrender of his passport and restrictions on managing money or making new investments.
His next court appearance is scheduled for July 24.
After being told in March 2022 he would be let go due to concerns about his performance, Shetty secretly transferred $35 million the following month to an account for a new crypto firm he created called HighTower, according to an indictment filed last week.
Fabric had adopted a policy to invest its cash in conservative investment types, and Shetty helped craft the policy, the indictment said.
Shetty’s plan was to pay Fabric a 6% interest on its investment and keep the additional returns for his crypto business.
As the crypto market crashed, the value of those funds was nearly zero by May of last year.
Shetty, 39, joined Fabric in March 2021. He was previously CEO of Seattle startup Blueprint Registry, acquired by David’s Bridal in 2018.
In a statement last week, Shetty’s attorney, Cooper Offenbecher, said he and his client disagreed with the indictment decision.
“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,” he said in a statement. “We look forward to responding to these allegations in Court.”
Fabric offers software, APIs, and other behind-the-scenes technology used by retailers and business-to-business brands for many aspects of online commerce, including pricing/promotion, inventory management, digital storefronts, and payments/checkout. The startup was valued at $1.5 billion last year after raising a $140 million Series C round led by SoftBank. It has raised nearly $300 million to date.
“Since May 2022, fabric has been cooperating with law enforcement in the investigation of the company’s former CFO Nevin Shetty’s conduct in the misuse of $35 million of fabric funds,” the company said in a statement to GeekWire last week. “We are thankful for and appreciate the hard work that the FBI and US Attorney’s Office have done in helping resolve this matter. While the amount taken is substantial, fabric remains very well-funded with years of runway.”
