Court Rejects Nevin Shetty’s Request for Kwon Files in Fraud Case Over Crypto Investment
On Wednesday, May 7, 2025, Judge Tana Lin of the United States District Court for the Western District of Washington denied a motion to compel documents filed by defendant Nevin Shetty in the case United States v. Shetty. The motion sought specific documents from a related investigation into Do Kwon, linked to the collapse of the TerraUSD (UST) cryptocurrency, under Federal Rule of Criminal Procedure 16.
Shetty’s legal team argued that the requested documents were material to preparing Shetty’s defense. The government opposed the motion, citing its untimeliness and lack of demonstrated materiality.
The case stems from accusations that Shetty knowingly invested funds from Fabric, a company he was associated with, into UST, allegedly with the intent to defraud. Shetty’s defense hinges on claims that he relied on misrepresentations by Kwon about UST’s stability, believing the investment through HighTower was conservative.
Previously, on July 25, 2024, Shetty filed a motion to compel Brady material, requesting evidence suggesting Kwon misled investors about UST’s safety and that Kwon’s actions caused UST’s collapse. On December 4, 2024, Judge Lin granted this motion, ordering the government to produce favorable evidence within 30 days. The government, unable to meet this deadline due to the volume of records from the U.S. Attorney’s Office for the Southern District of New York’s Kwon investigation, provided a factual summary instead.
On January 10, 2025, the government sought reconsideration, arguing the summary satisfied its Brady obligations. Judge Lin upheld this on reconsideration, finding Shetty’s speculation about additional favorable evidence insufficient to challenge the government’s compliance. Following this, Shetty requested specific documents underlying the summary, leading to the March 25, 2025, motion to compel under Rule 16.
Judge Lin denied the motion on two grounds. First, she ruled it untimely, as it was filed after the July 1, 2024, pretrial motions deadline. Shetty argued the government’s summary triggered a continuing duty to disclose under Rule 16(c), but the court found this inapplicable, as the summary was produced under Brady, not Rule 16. Additionally, Lin found no good cause for the delay, noting Shetty’s counsel knew of the Kwon-related materials by April 2024 but did not file under Rule 16 before the deadline.
Second, the court held that Shetty failed to show the requested documents’ materiality. Shetty’s 64 requests included 39 specific documents, such as emails and presentations, and 25 broader demands for “all evidence” underlying the government’s summary. Lin noted that Shetty did not specify how these materials, such as communications about Terra Luna’s partnership with the Washington Nationals, were relevant to his defense. The court emphasized that Rule 16 requires a threshold showing of materiality, which Shetty’s general claims about Kwon’s misrepresentations did not meet.
The ruling clarified that while Rule 16 is broader than Brady, it does not permit broad fishing expeditions. Lin also pointed out that some requested materials, like a 2022 press release and a 2020 video, were publicly available, negating the government’s obligation to produce them.
“Mr. Shetty has not made a sufficient showing of materiality with respect to his specific requests for discovery,” Lin said. “Accordingly, Mr. Shetty’s motion to compel is DENIED.”
Please contact BlockTribune for access to a copy of this filing.
