DOJ Ties Kansas Bank Collapse to $225 Million ‘Pig Butchering’ Seizure
Shan Hanes, the previous CEO of Heartland Tri-State Bank, wired millions in embezzled funds to fraudsters who assured crypto riches and was apprehended in 2024. Now, a DOJ problem shows he was the single biggest victim in a global ‘pig butchering’ USDT laundering network.
A Kansas banker who robbed millions from his small-town bank in 2023, which activated its collapse, lost much of the money to overseas crypto scammers targeted in a record-breaking DOJ bust, according to a problem filed Wednesday. Prosecutors have actually filed a civil loss action targeting over $225 million in laundered USDT, part of a butchering fraud with ties to a Philippines call center that ensnared Shan Hanes, the disgraced former CEO who embezzled $47 million from Heartland Tri-State Bank, a theft which was directly credited to the agricultural loan provider’s demise in 2023. According to the Department of Justice problem, OKX, a crypto exchange, offered key information that helped identify a detailed network of accounts on the exchange utilized to launder the crypto proceeds.
Scammers washed funds by very first directing victims to send USDT to 93 scam-controlled deposit addresses. From there, the funds were routed through as numerous as 100 intermediary wallets in a process designed to obscure the source of funds and mix deposits from multiple victims, according to the complaint. These laundered funds were then funneled into 22 main OKX accounts and additional shuffled throughout 122 extra OKX accounts, all connected by shared IP addresses, recycled KYC files, and coordinated behavior supposedly traced to a Manila-based fraud substance, which the complaint names as ITECHNO Specialist Inc. In total, the DOJ states that approximately $3 billion in transaction volume was created by this laundering network.
Largest victims
In total, the DOJ says there were 434 victims and has recognized 60 of them who lost a combined $19.4 million. The biggest of these victims was Hanes, with the DOJ identifying $3.3 countless the $47 million he embezzled in this seizure. Hanes embezzled the cash in between May 30, 2023, and July 7, 2023, according to both the DOJ problem and the Federal Reserve’s report into the collapse of Heartland Tri-State Bank, among the banks to collapse in the after-effects of the 2023 U.S. banking crisis. During this six-week period, Hanes initiated 10 wire transfers amounting to approximately $47.1 million from Heartland Tri-State Bank, a little community lending institution focused on agricultural loans, to a crypto wallet he controlled.
These wire transfers occurred in between the bank’s quarterly regulatory reporting durations, allowing the activity to go at first undetected. At the time, Heartland was well-capitalized with $13.7 million in capital and $139 million in assets, but Hanes’ actions depleted its liquidity, activated $21 million in emergency loaning, and left the bank with a $35 million capital hole, requiring regulators to shut it down in July 2023. According to prior reporting from CNBC, Hanes likewise took $40,000 from the Elkhart Church of Christ, $10,000 from the Santa Fe Financial Investment Club, $60,000 from his daughter’s college fund, and liquidated almost $1 million in stock from a firm called Elkhart Financial to send to pig butchering scammers.
He was sentenced to 24 years in jail in August 2024. The DOJ complaint described him as both a perpetrator and a victim.
Seized crypto most likely going to Fed stockpile
Crypto seized by the U.S. federal government, such as in this case, is most likely to be earmarked for a not-yet-established stockpile ordered by President Donald Trump. The bitcoin BTC reserve and the stockpile of other cryptocurrencies have not yet been formally established, but the Treasury Department has actually been leading an audit of governmental digital possession holdings to identify what needs to be gathered. Once established, the long-term crypto holdings will likely put seized bitcoin in one fund and other types of tokens in another. The holdings in this case seem in considerable quantities of USDT, according to the filing. It’s unclear what funds may eventually be returned to victims, as only a fairly small portion of those directly damaged have been identified.
