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The verdict followed five days of deliberations, which began last week when jurors initially reported being deadlocked on at least one count. Prosecutors had urged Judge Katherine Polk Failla to instruct the jury to continue deliberating for a full verdict, Inner City Press reported.
Roman Storm faced three felony counts stemming from his role in creating the cryptocurrency mixing service. Prosecutors alleged Tornado Cash laundered over $1 billion in criminal proceeds, including funds for North Korea’s Lazarus Group
The conviction, reported by Inner City Press, on the unlicensed money transmitting charge represents a partial victory for the government. The deadlock on the money laundering and sanctions conspiracy charges means no verdict was reached on those counts. Sentencing will occur at a later date.
Immediately after the verdict, prosecutors moved to remand Storm to prison, arguing he posed a flight risk due to his Russian citizenship and past statements about asylum options. Assistant U.S. Attorney Arad alleged Storm had “advised people how to cheat the immigration system.” Defense attorney Keri Axel countered that Storm remained on bond secured by his house and had surrendered his passport. Judge Failla took the matter under advisement.
Storm’s defense maintained he was merely a developer of open-source software and lacked control over Tornado Cash after its launch. The case is seen as a landmark test of developer liability for decentralized finance ( DeFi) tools. The outcome sets a precedent but still leaves unresolved questions.
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A former chief financial officer’s (CFO) attempt to turn his employer’s treasury into a personal cryptocurrency “ yield farm” has ended in a federal prison sentence. Nevin Shetty, the 42-year-old former CFO of Seattle e-commerce unicorn Fabric, was sentenced March 5 to two years in prison for wire fraud after secretly funneling $35 million into a decentralized finance ( DeFi) scheme that collapsed in less than a month
According to a press release by the U.S. Attorney’s Office, Shetty helped draft a strict, conservative investment policy for the company’s hundreds of millions in venture capital. However, in early 2022, Shetty launched a side business called HighTower Treasury. Prosecutors say Shetty’s plan was a classic crypto arbitrage.
After moving $35,000,100 of Fabric’s cash into HighTower, Shetty funneled the funds into DeFi lending protocols—specifically the Terra/Luna ecosystem—which at the time offered annual percentage yields of 20% or more. Shetty planned to pay Fabric a modest 6% “safe” return while pocketing the 14% surplus for himself and his partner.
In the first 30 days, the scheme appeared to work, generating roughly $133,000 in personal profit. However, the gamble turned into a nightmare in May 2022 when the TerraUSD (UST) stablecoin de-pegged, triggering a $40 billion wipeout. Within days, the $35 million Fabric treasury held by Shetty had plummeted in value to virtually nothing.
The loss had significant and severe effects on the company,” U.S. District Judge Tana Lin said during the sentencing. “Your actions threw into complete turmoil the lives of those 60 people (who were laid off) … You almost put the company out of business … You were playing with money that wasn’t yours.”
The financial hole left by the failed crypto bet forced Fabric to lay off 60 employees, a point the prosecution emphasized as “irrevocable damage” caused by Shetty’s greed.
Despite the defense’s argument that Shetty was merely making an “unauthorized investment” rather than committing fraud, the jury found that his “web of lies”—including hiding the transfers from the board and other executives—constituted criminal activity.
He chose high-yield DeFi lending protocols that promised 20% returns,” said First Assistant U.S. Attorney Charles Neil Floyd. “His lies did not fool the jury.”
Shetty’s case marks one of the most significant criminal sentencings involving corporate treasury mismanagement and the volatile DeFi sector to date.
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