The Federal Bureau of Investigation (FBI) has recovered more than $8 million worth of digital assets to repay shareholders of a bank that failed after its chief executive funneled millions of dollars of depositor money into a crypto scheme.

In 2023, Shan Hanes, the CEO of Heartland Tri-State Bank (HTSB) in Elkhart, Kansas, sent a total of $47.1 million of the bank’s funds to a crypto scheme that turned out to be a blatant scam.

The Department of Justice (DOJ) said that Hanes had fallen prey to “pig butchering,” a scheme where scammers build relationships with their targeted victims to lure them into making fraudulent investments.

The bank’s customers got their deposits back because the institution was insured through the Federal Deposit Insurance Corporation (FDIC).

About 30 local shareholders, however, lost a combined $8.2 million when their equity in a holding company that owned the bank nosedived after the scandal, explains Special Agent Sage Hemmert, who led the FBI’s investigation into Tri-State.

“These were not Silicon Valley investors. These were regular people from southwest Kansas. And a lot of them had their net worth tied up in this bank.” 

Those shareholders are now primed to get most of their money back after the FBI traced more than $8 million worth of the embezzled crypto and seized it from one of the scammer’s digital wallets.

Last August, Hanes was sentenced to 24 years in prison after leading guilty to one count of embezzlement by a bank officer.

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