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Washington Man Sentenced to 2 Years for Diverting $35M to Failed DeFi Platform

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A Washington state man has been sentenced to two years in federal prison after diverting $35 million from his employer to fund a personal decentralized finance venture that ultimately collapsed during the 2022 crypto market downturn.

Key Takeaways:

  • A former Washington CFO was sentenced to two years in prison for diverting $35 million in company funds into a failed DeFi investment scheme.
  • The crypto strategy collapsed during the 2022 market downturn following the Terra ecosystem crash.
  • The losses severely impacted the company, triggering layoffs and nearly forcing the business to shut down.

Nevin Shetty, 42, was convicted of wire fraud in November after prosecutors showed he secretly transferred company funds into a crypto investment scheme tied to his side project, HighTower Treasury.

The funds belonged to a private software company where Shetty served as chief financial officer.

Prosecutors Say CFO Diverted Funds After Learning of Job Termination

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According to the US Department of Justice, Shetty drafted a conservative investment policy for the firm that limited how corporate funds could be used.

Despite those internal guidelines, he moved tens of millions of dollars from the company’s accounts after learning in April 2022 that his position would be terminated due to performance concerns.

The money was routed to HighTower Treasury, where Shetty and a business partner invested heavily in decentralized finance lending protocols promising annual returns of 20% or more.

Prosecutors said Shetty intended to return a fixed payment to the company while keeping the remainder of any profits generated by the crypto strategy.

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Initially, the scheme produced modest gains. Court filings show the operation generated roughly $133,000 in its first month.

However, the broader crypto market soon entered a steep downturn following the collapse of the Terra ecosystem in May 2022.

As the market fell, the value of HighTower’s positions rapidly deteriorated. The investments tied to Shetty’s strategy plunged from approximately $35 million to nearly nothing during the subsequent crypto winter.

After the losses became clear, Shetty admitted his actions to colleagues at the company. He was later dismissed from his role.

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During sentencing, US District Judge Tana Lin said the incident inflicted serious damage on the business. According to the court, the company faced “significant and severe effects” from the losses and was nearly forced to shut down.

The financial damage also triggered layoffs, with about 60 employees losing their jobs as the company attempted to stabilize operations following the missing funds.

Federal prosecutors had requested a nine-year prison sentence, arguing that Shetty’s actions involved deception and caused lasting harm to the company and its staff. The court ultimately imposed a shorter sentence of two years.

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Washington Man Ordered to Pay $35M Restitution After DeFi Fraud

In addition to prison time, Shetty was ordered to pay $35,000,100 in restitution. After completing his sentence, he will remain under supervised release for three years.

Judge Lin also imposed restrictions on Shetty’s future employment, prohibiting him from serving as an officer or director of a company without approval from the probation office.

Last month, two teenagers from California faced serious felony charges after authorities say they traveled hundreds of miles to carry out a violent home invasion in Scottsdale, Arizona, in a bid to obtain cryptocurrency believed to be worth $66 million.

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The case came amid a broader rise in so-called wrench attacks, physical assaults aimed at forcing crypto holders to hand over private keys.

Security researcher Jameson Lopp’s public database lists roughly 70 such incidents in 2025, a sharp increase from the previous year.

Security analysts say criminals are increasingly using leaked personal data to identify targets and recruiting young perpetrators online to reduce traceability.

The post Washington Man Sentenced to 2 Years for Diverting $35M to Failed DeFi Platform appeared first on Cryptonews.

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OmniPact Raises $50 Million to Power the Future of Decentralized Trust Infrastructure

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Nexo Partners with Bakkt for US Crypto Exchange and Yield Programs

TLDR:

  • OmniPact raised $50M from anonymous institutional investors and family offices to advance its trust protocol.
  • The funding will cover mainnet development, security audits, and a Q1 2026 testnet launch on schedule.
  • Smart contracts serve as on-chain guarantors, removing all intermediaries from peer-to-peer transactions.
  • OmniPact’s roadmap includes RWA integration and AI agent transaction capabilities across multiple chains. 

OmniPact has secured $50 million in a private funding round to advance its decentralized trust infrastructure. The New York-based protocol is building a trust layer for peer-to-peer transactions involving both physical and digital assets.

A consortium of institutional investors and family offices backed the round, requesting anonymity. The capital will speed up mainnet development, cross-chain integration, and the launch of a decentralized arbitration module, bringing the project closer to full global deployment.

Funds to Drive Mainnet Development and Technical Expansion

A large share of the proceeds will fund the final development of OmniPact’s core contracts. Security audits of the multi-chain infrastructure are also scheduled as part of this phase.

Both steps must be completed before the protocol can advance into public deployment. This work is set to run alongside active engineering efforts on the mainnet.

OmniPact also confirmed that its testnet launch remains on schedule for Q1 2026. This milestone gives the protocol a clear timeline as it moves toward full market entry. Reaching this target would place OmniPact ahead of many competitors in the decentralized commerce sector.

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Part of the capital will also go toward expanding OmniPact’s engineering team. More developers are expected to speed up real-world asset (RWA) integration across the platform. AI agent transaction capabilities are also being developed as part of this funding cycle.

Co-founder and CEO Alex Johnson commented on the raise, stating: “The funding validates our thesis that the future of commerce requires a neutral, transparent, and trustless foundation.”

Johnson added that the infrastructure “eliminates intermediaries entirely, returning power to users.” He further noted that investor confidence would allow the team to bring secure, decentralized custody to a global audience.

Smart Contracts and Decentralized Arbitration as the Trust Layer

OmniPact’s protocol is built to solve the trust problem that persists in peer-to-peer transactions. The platform deploys smart contracts as on-chain guarantors, removing reliance on any centralized platform. Two parties can therefore transact directly, with no third-party intermediary required.

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Furthermore, the protocol pairs algorithmic custody with a built-in decentralized arbitration module. A reputation system operates alongside both tools, reinforcing accountability across all user activity.

Together, these mechanisms support secure and verifiable peer-to-peer asset exchange. The model also removes single points of failure common in traditional escrow services.

Cross-chain integration forms another technical pillar of OmniPact’s core architecture. The protocol is engineered to function across multiple blockchain networks at the same time. This gives the platform access to users operating across different digital asset ecosystems.

Institutional backers expressed confidence in OmniPact’s roadmap at the time of the announcement. They cited the protocol’s capacity to set new standards across both Web4 and traditional commerce.

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Johnson concluded that the round gives the team the resources to “execute our roadmap” and deliver a live, fully operational protocol to a global audience.

 

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European Energy Crisis: How Russia and Qatar Shocks Are Threatening EU Industrial Power

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Nexo Partners with Bakkt for US Crypto Exchange and Yield Programs

TLDR:

  • Europe still imported 2 billion cubic feet per day of Russian LNG last year, half of Russia’s total exports.
  • Qatar supplies 20% of global LNG and declared force majeure, with production halted for at least one month.
  • The U.S. now controls over 50% of Europe’s LNG supply, giving Washington direct leverage over EU energy costs.
  • Gas prices have already surged over 50% as simultaneous supply shocks strain Europe’s limited energy alternatives.

European energy crisis pressures are mounting as Russia redirects LNG exports while Qatar declares force majeure on gas. Europe replaced cheap Russian pipeline gas with costly LNG after the Ukraine war began.

Now two simultaneous supply shocks are hitting the continent at once. Gas prices have already surged over 50% in recent days.

The EU faces limited alternatives and growing concerns about a 2022-style energy crunch that could once again disrupt factories across the region.

Russia Redirects Exports as Qatar Shuts Down Production

Before the Ukraine war, Europe relied on 15 billion cubic feet per day of Russian gas. That supply kept European manufacturing costs competitive for years.

After the conflict began, Europe sourced costlier LNG from the U.S., Qatar, and other producers. The transition raised energy costs for European industry considerably.

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The EU still imported 2 billion cubic feet per day of Russian LNG last year. That volume is roughly half of Russia’s total LNG exports globally. Russia has now announced it will redirect those flows to China and India.

Bull Theory stated on X: “Russia announced it will redirect part of its LNG exports away from Europe to friendly countries like China and India immediately.”

Russia’s move comes before the EU’s 2027 legal ban on Russian gas takes effect. Moscow has clear incentive to act on supply leverage before that deadline.

European policymakers now face a difficult position with limited response time. New supply chains cannot be established quickly enough to fill the gap.

Qatar’s Ras Laffan facility shutdown has added another blow to Europe’s energy position. Qatar supplies 20% of all global LNG and declared force majeure after the closure.

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Normal production is not expected to resume for at least one month. Europe had relied on Qatari LNG as a central part of its post-Russia supply plan.

U.S. Leverage Grows While European Industry Faces Closures

The United States now supplies over 50% of Europe’s LNG. This gives Washington leverage over European energy costs and industrial policy.

European manufacturers must either absorb higher costs or relocate operations to North America. Bull Theory noted: “This effectively allows the U.S. to weaponize energy costs, forcing European factories to either pay a massive premium or relocate.”

Unlike China and India, Europe has not built diverse energy supply chains. Both nations secured alternatives that shielded them from current disruptions.

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Europe, by contrast, faces simultaneous shocks with very few substitutes. Brussels is caught between U.S. bargaining pressure and a supply gap that diplomacy cannot quickly fill.

If the Hormuz blockade continues for weeks, a second wave of factory closures becomes likely. A similar pattern to 2022 could emerge, with permanent industrial losses for the European energy crisis.

The EU’s manufacturing standing faces direct structural pressure as a result. The outcome depends on events largely outside Europe’s control.

Russia still earns billions from the EU despite current tensions. The coming 2027 ban removes Moscow’s incentive to keep flows stable.

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Europe has few tools to address a supply failure of this scale. The energy challenge now extends well beyond what Brussels can manage alone.

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Kalshi, Polymarket Eye $20B Valuations in Potential Fundraising: WSJ

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Kalshi, Polymarket Eye $20B Valuations in Potential Fundraising: WSJ

Prediction market platforms Kalshi and Polymarket are reportedly exploring new fundraising rounds that could value the companies at around $20 billion each, roughly double their most recent valuations.

Both platforms have held preliminary discussions with potential investors about raising fresh capital at the elevated valuation, the Wall Street Journal reported on Friday, citing people familiar with the matter. The report noted that the negotiations remain at an early stage and may not result in deals or secure the targeted valuation.

Kalshi currently operates in the United States and offers markets allowing users to wager on outcomes tied to sports, politics, the economy and cultural events. The company was last valued at about $11 billion in December when it raised $1 billion from investors including Paradigm and Sequoia Capital.

Founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi received approval from the US Commodity Futures Trading Commission in 2020 to operate as a regulated exchange for event-based markets. The platform has since expanded rapidly and recently surpassed a $1 billion revenue run rate, with some estimates placing the figure closer to $1.5 billion.

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Related: Kalshi, Polymarket face trading halt in Nevada after court rulings

Polymarket plans US launch later this year

Polymarket, launched in 2020 by Shayne Coplan, remains inaccessible to US users without a virtual private network but plans to introduce a regulated domestic version of its platform later this year. The company was valued at roughly $9 billion in October after Intercontinental Exchange, the owner of the New York Stock Exchange, agreed to invest up to $2 billion.

Both platforms have drawn attention from lawmakers and regulators. As Cointelegraph reported, US Democratic lawmakers are drafting legislation to regulate prediction markets after suspiciously timed bets on the timing of US and Israeli strikes on Iran raised insider-trading concerns.