- A former CEO of a local bank in the U.S. lost the company to a crypto scam.
- A bank client raised the alarm after the CEO approached him for a $12 million loan.
- The company’s customers are not affected, but shareholders face heavy losses.
A former chief executive officer of a local bank in the U.S. sank the company after using the company’s money for a cryptocurrency investment, which later turned out to be a scam, a Bloomberg report revealed. According to the report, signs of the CEO’s troubles appeared after he asked one of his wealthiest clients for a $12 million loan.
The said CEO, Shan Hanes, led the Heartland Tri-State Bank, which sits in Kansas, U.S.A. The report detailed that the bank mostly offers lending services to local farmers and businesses.
Precisely, the report alleged the CEO had poured the company’s money into a cryptocurrency investment in Hong Kong. However, the CEO ran into trouble and needed extra funds to get the money out.
The report mentioned that Hanes told the client he approached that someone was helping him invest in crypto. However, he said there was a problem with wire payments, and he would then need a $12 million loan to recover his investments.
After a failed attempt to get money from one of its wealthiest clients and offering a $1 million interest on the loan, troubles within the company surfaced. The Federal Deposit Insurance Corporation said it would spend over $54 million insuring the bank’s customers.
Even though the details of the scam are still unclear, the report implied that Hanes might have fallen for what U.S. regulators call “pig-butchering,” a type of scam where victims are asked to bring more money to recover their assets. According to the report, law enforcement estimates that people have lost billions of dollars to these scams.
Since the bank went insolvent, another company, Dream First, has taken over the company’s assets. Customers’ funds have also been moved to the new bank, incurring no losses. However, the shareholders are holding onto the ruins of the old company.
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