Crypto fraud ruined a Kansas bank and sent its CEO to prison for 24 years

• The CEO of a Kansas bank has been sentenced to 24 years in prison for his role in a crypto scam.
• The CEO was caught up in a “pig slaughter” scam and transferred $47 million from his bank to fraudsters.
• This particular type of fraud has allowed criminals to steal at least $75 billion worth of cryptocurrencies in recent years.

The CEO of a small Kansas bank has been sentenced to over 24 years in prison for his role in a cryptocurrency scam that caused the bank's collapse and takeover by the Federal Deposit Insurance Corporation.

Shan Hanes, the CEO of Heartland Tri-State Bank, fell victim to a “pig slaughter” scam in which he stole $47 million from the bank to invest in what he believed to be legitimate crypto investments.

In the case of a pig slaughter fraud – named after the method farmers use to fatten pigs before slaughter — Criminals build a relationship with their victims and convince them to continue transferring money, promising lucrative returns on investments but later disappearing with the funds.

According to the Justice Department, Hanes initiated 11 electronic transfers totaling $47.1 million – a significant portion of the nearly $140 million in total assets and $130 million in deposits the bank held as of March 2022.

According to court documents, Hanes also stole money from his daughter's college fund, a church and an investment club.

Hanes began transferring the funds in May 2023 and continued doing so for the following eight weeks before the Kansas Office of the State Bank Commissioner closed the bank in late July 2023 and took it over from the FDIC.

Heartland Tri-State Bank, based in Elkhart, Kansas, was one of only five U.S. banks to close last year.

“[Hanes’] Their involvement in this plot ultimately led to the collapse of the bank,” said Stephen Cyrus, special agent in charge of the FBI's Kansas City field office.

“His job, the bank's job, was to protect its customers and to detect fraudulent activities – not to participate in them,” he added.

Researchers say pig slaughter scams are becoming increasingly common. Many involve sending a text message to a fake number and then building trust with the victim.

Through this type of fraud in particular, criminals have stolen at least $75.3 billion worth of cryptocurrencies in recent years, according to a paper published this year by researchers at the University of Texas at Austin.