Crypto romance scam victim sues Citibank, East West, and Cathay over $20M loss

A victim of a multi-million dollar Romance scam has sued three US banks, accusing them of negligence and enabling the fraud. Plaintiff Michael Zidell, who reportedly lost roughly $20 million to a fraudulent scheme, claims he transferred millions across accounts held at Citibank, East West Bank, and Cathay Bank without the institutions detecting or acting upon red flags. According to the lawsuits, Zidell made 12 transfers totalling nearly $4 million to accounts at Citibank, 18 transfers totalling around $7 million to East West Bank, and 13 transfers totalling over $9.7 million to Cathay Bank. All transactions were allegedly directed by individuals behind a fake crypto investment platform operating under the guise of a romantic relationship, a common tactic these days used by bad actors. Zidell’s legal battle began with the lawsuit against Citibank, filed on June 24 in New York, which sought to hold the bank accountable for failing to detect and stop nearly $4 million in transfers. Just days later, on July 2, Zidell followed up with a second lawsuit in California, naming East West Bank and Cathay Bank as additional defendants. What is a pig butchering scam? Romance scams, commonly catagorised under “pig butchering” scams, are a form of investment fraud in which scammers build fake online relationships with victims over weeks or months before encouraging them to invest in fraudulent platforms. Such schemes often begin on social media platforms, dating apps, or messaging services. Scammers gain the victim’s trust, typically posing as successful investors, and gradually introduce them to seemingly legitimate investment opportunities, often related to cryptocurrencies or other digital assets like non-fungible tokens (NFTs). In Zidell’s case, he alleges that in early 2023, he was contacted on Facebook by a woman identifying herself as Carolyn Parker. As they began communicating, Parker introduced herself as a business owner based in California and slowly developed a relationship with Zidell over text and video chats on WeChat. A month into the relationship, Parker encouraged Zidell to invest in NFTs via a website called OpenrarityPro.com. She claimed to have earned millions and reportedly presented fabricated financial statements to gain his trust. Zidell began making transfers to various bank accounts provided by the platform. He alleges that the funds were supposedly routed through multiple banks, which he was led to believe was due to a “large volume of customer deposits.” However, the entire scheme was a ruse, and by April 2023, the website had disappeared, along with his funds. Banks did not spot red flags Zidell claims the banks should have detected clear red flags. In his lawsuits, Zidell argues the banks “turned a blind eye” to their regulatory obligations and enabled the scam by processing multiple wire transfers without proper scrutiny. As such, he claims the banks “materially aided” the scheme by letting the scammers open accounts and facilitate the suspicious transfers. According to court filings, the account at Citibank was registered under Guju Inc., a company whose account opening documents projected monthly wire activity below $250,000. Yet, Zidell claims his very first transfer to that account surpassed its stated annual revenue. He argues that such discrepancies, combined with the volume and frequency of the transactions, should have triggered internal investigations under Know Your Customer and Anti-Money Laundering regulations. Across both suits, Zidell is seeking compensatory damages, legal fees, and interest, and has requested a jury trial. The post Crypto romance scam victim sues Citibank, East West, and Cathay over $20M loss appeared first on Invezz

Source: Invezz