The former head of Kansas-based Heartland Tri-State Bank pleaded guilty on Thursday to embezzling $47.1 million in connection with a series of “personal cryptocurrency purchases.” This led to the bank’s bankruptcy in July 2023, causing a complete loss of equity for investors, the U.S. District Attorney’s Office in Kansas noted.
Shan Hanes (52), who served as the bank’s CEO, allegedly organized crypto schemes to cover the bank’s losses. As noted in the court’s ruling, he squandered tens of millions of dollars in cryptocurrencies.
“Shan Hanes is a liar and a master manipulator who led to the collapse of Heartland Tri-State Bank,” stated lawyer Kate Brubacher.
“Many victims will never fully recover the loss of their lifetime savings and retirement funds. But at least we at the Justice Department can see that Hanes is being held criminally accountable for his actions.”
TheFBI, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Federal Housing Finance Agency are currently investigating the cryptocurrency case. Hanes will receive a maximum of 30 years in prison, and is expected to be sentenced on August 8.
Bank collapse and cryptocurrency connections
The involvement of a number of recently collapsed banks, including Signature, SVB and Silvergate, has reverberated through the cryptocurrency sector. The failed bank’s exposure to cryptocurrencies deepens the debate over the appropriate relationship between banks and the cryptocurrency ecosystem.
Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank provided banking services to cryptocurrency companies in the form of holding deposits or making loans to cryptocurrency companies.
In February 2023. The Fed issued a joint statement highlighting liquidity risks for banks serving crypto organizations. It warned banking organizations to use existing risk management policies to minimize these risks.
