The former CEO of Heartland Tri-State Bank in Kansas has pled guilty to embezzling $47.1 million for personal crypto purchases, leading to the bank’s collapse in July 2023. Shan Hanes, 52, orchestrated crypto schemes to cover the bank’s losses, squandering millions in cryptocurrency. The U.S. Attorney’s Office for the District of Kansas stated that many investors suffered a complete loss of equity due to Hanes’ actions.

Attorney Kate Brubacher called Hanes a “liar and a master manipulator” who caused the bank’s collapse, resulting in victims losing their life savings and retirement funds. The FBI, Federal Deposit Insurance Corporation, Federal Reserve Board, and Federal Housing Finance Agency are currently investigating the case.

Hanes faces a maximum of 30 years in prison and will be sentenced on August 8. The incident has raised concerns about the relationship between banks and the crypto ecosystem, as other failed banks like Signature, SVB, and Silvergate had exposure to the crypto sector. The Federal Reserve issued a warning in February 2023 about liquidity risks for banks serving crypto organizations, urging them to manage these risks effectively.