I came across an incident that made me realize once again how lax risk management is in the cryptocurrency industry. A former CFO of a startup in Seattle secretly diverted $35 million of the company's funds into a crypto platform. It happened in 2022; this person transferred the funds covertly to a suspicious platform called HighTower Treasury and was trying to invest in a DeFi protocol promising high yields.

At first, it seemed like small returns were coming in, generating over $130k in profit, but everything changed after the Terra collapse. By May 2022, the investment had become almost worthless. Eventually, it was discovered by colleagues in management, and the person was fired and charged with wire fraud.

Recently, the U.S. Department of Justice handed down a two-year prison sentence. It’s interesting that an executive who embezzled such a huge amount of $35 million only received two years, but what’s more concerning is why this kind of thing happened in the first place. It seems that the allure of high yields can trap even executives—that’s the kind of attraction crypto assets have. However, the risk is significant. In addition to the sentence, they are required to repay the stolen funds and are under supervised release for three years.

Seeing incidents like this really highlights the importance of fund management and compliance. Not only individual investors but also corporate management can make mistakes. The crypto world is a growing industry, but at the same time, such risk cases are increasing. I see various assets on Gate, but it’s really important to do your own research and choose trustworthy platforms.