A Seattle federal jury convicted a software startup's former executive of wire fraud on Friday, after prosecutors accused him of siphoning $35 million in company funds into his personal fintech project and then losing the money in a cryptocurrency collapse weeks later.

Following an eight-day trial and nearly nine hours of deliberations, the jury found Fabric Inc.'s ex-Chief Financial Officer Nevin Shetty guilty on four counts of wire fraud.

Prosecutors claimed Shetty transferred $35 million from a Fabric bank account in April 2022 to an account controlled by his fledgling business, HighTower Treasury Corp., and put the money in crypto with the goal of cashing in on interest payments. He allegedly hid the investment from Fabric's board of directors, knowing it wouldn't approve of such a risky move, until a crash that May rendered the digital currency practically worthless.

Alex Little of Litson PLLC, representing Shetty, said Friday that they are "disappointed in this result but will vigorously pursue an appeal."

"A corporate officer should not be prosecuted for making an investment with which his board later disagrees," Little told Law360 in an email.

U.S. Attorney Neil Floyd of the Western District of Washington, whose office brought the case, issued a statement thanking the jurors for their attention during the trial.

"They listened attentively and deliberated with care in reaching this verdict," Floyd told Law360 in a Friday email.

Little argued at trial that Shetty was being unfairly punished for an investment decision that didn't pan out because Fabric was looking for a "scapegoat" to explain the $35 million loss to its venture capitalist backers.

The defense contended he was acting within the authority that the board of directors had entrusted him with to make financial decisions he believed were in Fabric's best interest. Shetty knew the company was looking to broaden its investment portfolio and boost its returns, and he saw a solution in HighTower, a legitimate business he co-owned with a business partner, Little told the jury.

A grand jury indicted Shetty on the four counts of wire fraud in May 2023.

During the trial, attorneys for the federal government told jurors that Shetty's scheme began soon after he learned he was being removed as CFO in March 2022 due to performance concerns. At the time, the board had directed him to put Fabric's money into traditional treasury accounts at banks to preserve capital as the company developed its e-commerce software products. Shetty helped draft a written investment policy in line with that strategy, assuring a board member in an early 2022 email that the finance team would stick with "relatively vanilla" investment options.

But Shetty then took Fabric's money for HighTower, which was only a few months old and had no other customers, according to prosecutors. He invested the funds in Terraform Labs' TerraUSD — a type of cryptocurrency known as a "stablecoin" that aims to maintain a consistent price — and other digital assets. Though Shetty initially suspected the investment would yield upwards of $100,000 a month in interest for HighTower, the value of the cryptocurrency bottomed out by mid-May 2022.

The ex-CFO has argued that he was misled about the viability of TerraUSD by Terraform's South Korean founder Do Kwon, who's been indicted in New York federal court for allegedly making false promises to entice investors. Kwon pled guilty in New York federal court last month to fraud and conspiracy charges tied to the scheme, which allegedly wiped out $40 billion in market value when it collapsed.

Shetty's attorney told jurors at trial that the government falsely accused him of a scheme to defraud Fabric and was determined to get a conviction, even though the evidence didn't support the wire fraud charges.

The jury was instructed that Shetty has a "complete defense" from the charges if jurors find that he acted within the authority granted to him by Fabric's leadership, regardless of whether he exercised good judgment.

The government is represented by Philip Kopczynski and Grace W. Zoller of the U.S. Attorney's Office for the Western District of Washington.

Shetty is represented by Alex Little and Zachary C. Lawson of Litson PLLC, and Jeffrey B. Coopersmith of Corr Cronin LLP.

The case is U.S. v. Shetty, case number 2:23-cr-00084, in the U.S. District Court for the Western District of Washington.