🌎 Ex-Bank CEO Sentenced for $47M Crypto Fraud Leading to Bank Collapse

A former Kansas bank chief executive has been sentenced to over 24 years in prison for embezzling $47 million in a crypto fraud that led to the bank’s collapse.

Shan Hanes, the former chief executive of the now-failed Heartland Tri-State Bank, has received a 293-month prison sentence after being found guilty of embezzling “tens of millions of dollars” in a crypto scheme that resulted in the bank’s downfall.

According to an Aug. 19 announcement by the U.S. Attorney’s Office in Kansas, Hanes pleaded guilty to one count of embezzlement by a bank officer. Between May and July 2023, he orchestrated over a dozen wire transfers totaling more than $47 million from Heartland Tri-State Bank to a crypto wallet in a scheme known as “pig butchering.”

During that period, the bank was insured by the Federal Deposit Insurance Corporation (FDIC), which absorbed the $47.1 million loss caused by Hanes’ actions. This fraudulent scheme not only led to the bank’s failure but also resulted in a $9 million loss for its investors.

U.S. Attorney Kate E. Brubacher stated that Hanes had “trespassed his professional obligations,” adding that the sentence serves as a “measure of justice for the victims and a statement that the U.S. Department of Justice will hold accountable those who violate positions of trust for their own gain.”

Hanes’ case underscores the risks in the crypto sector, where the pseudo-anonymous nature of blockchain networks can attract those seeking quick and potentially illicit gains. This sentencing follows the case of Reginald Fowler, a former Minnesota Vikings co-owner, who received a six-year prison sentence for operating a “shadow bank” within the crypto industry, involving over $700 million in unregulated transactions in 2018.