Online scams are as old as the internet, but the rise of crypto has given con artists a valuable new tool — digital coins that can be transferred instantly, without oversight from banks legally obligated to monitor transactions for malfeasance. In 2023, crypto fraud cost American investors an estimated $4.8 billion, according to the F.B.I. The scams are so common that law-enforcement authorities have taken to calling them by a pithy name: Pig butchering, a rough translation of an expression widely used in China, where these scams have proliferated in recent years. The scammer’s victim is the pig, slowly fattened for slaughter.
The scams typically begin with messages on LinkedIn, Facebook or WhatsApp from an unknown phone number or someone posing as a romantic prospect. Sometimes the conversations lead to business introductions, a connection to a banker or asset manager, with a slick headshot and a fictional résumé. The target is offered an investment opportunity, often backed up by a fraudulent website masquerading as an actual crypto business or an app that displays fake profits on fake account statements. Eventually, the scams all end the same way: The money disappears.
After draining his personal savings, Hanes began stealing — from his local investment club, from his church and finally from the bank. Over a few weeks, he ordered a series of large wire transfers, telling his bewildered colleagues that he was helping a client. In May 2023, Hanes transferred $3 million from Heartland to an account at a company called Kraken, which offers trading in digital currencies. To buy more crypto, he directed Heartland to borrow about $21 million from a network of regional lenders and siphoned a similar amount using a credit line that the bank maintained with another institution. Over four weeks in June, Hanes sent $31 million of the embezzled funds to his Kraken account.
Later, as his friends and colleagues sorted through the wreckage, Hanes would be called a thief, a liar and “pure evil.” But his lawyer eventually put it differently: “He was the pig that was butchered.”
On July 5, 2023, not long before Heartland’s board meeting, Hanes sent a text to a farmer in Elkhart named Brian Mitchell: He needed Mitchell’s help with something. Mitchell didn’t have any role at the bank, but he was used to fielding requests from friends in town. With a diamond stud in one ear, Mitchell stood out among the other farmers. He was one of the most successful people in Elkhart, a veteran businessman who owned a regional chain of movie theaters, including one a block from Heartland.