In a shocking twist to a 2023 bank failure, the U.S. Department of Justice has revealed that a massive $225 million crypto fraud scheme known as a “pig butchering” scam played a central role in the downfall of Heartland Tri-State Bank in Kansas.
Ex-Banker Embezzled Millions and Lost It to Crypto Scammers
Shan Hanes, the former CEO of Heartland Tri-State Bank, wired over $47 million in stolen funds to overseas scammers who promised huge crypto returns. Between May and July 2023, Hanes made 10 large wire transfers. He sent the money into crypto wallet that he secretly controlled. The transfers occurred between regulatory reporting periods, allowing the theft to go unnoticed until the damage was done.
At the time, Heartland had $139 million in assets and $13.7 million in capital. But Hanes’ actions drained its liquidity, forced the bank to borrow $21 million in emergency funds, and left a $35 million gap—leading regulators to shut the bank down in July 2023.
DOJ Identifies Global Scam Network
According to a Department Of Justice complaint filed this week, Hanes became the largest known victim of a sprawling crypto scam run out of the Philippines. The Investigators linked the scam to ITECHNO Specialist Inc., a Manila-based compound operation 93 scam deposit wallets and over 100 intermediary wallets to hide stolen funds. These funds were eventually laundered through 144 accounts on crypto exchange OKX.
OKX provided key information to authorities, helping uncover links between accounts using shared IP addresses and fake ID documents. In total, the laundering network handled an estimated $3 billion in transaction volume, with Hanes losing at least $3.3 million of the stolen bank funds through this network.
Victims, Seizures, and the Future of Seized Crypto
So far, authorities have identified 434 scam victims, with 60 confirmed to have lost $19.4 million collectively. Hanes remains the largest victim, despite being the perpetrator of the initial theft. He also stole smaller amounts from his daughter’s college fund, a local church, a Kansas investment club, and his own financial firm.
On August 2023, Hanes was sentenced to 24 years in prison.
Now, the U.S. government has seized $225 million in laundered USDT from the scam network. These assets will likely be added to a new federal crypto stockpile, part of a broader initiative ordered by President Donald Trump. The Treasury is currently auditing crypto holdings to determine future management of seized assets.
However, it’s still uncertain how much—if any—of the funds will be returned to victims, as many have yet to be identified.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Always do your own research before making any investment decisions.
