Bank Accused of Overlooking Warning Signs, Assisting Con Artists in a $20,000,000 Pig Farming Romance Scam Involving Citibank
In a significant legal development, a Texas man, Michael B. Zidell, has filed a lawsuit against Citibank, accusing the bank of enabling scammers in a $20 million pig butchering scheme involving non-fungible tokens (NFTs) on a website called OpenrarityPro.com.
The lawsuit, which claims that Citibank ignored numerous red flags and provided substantial assistance to the scammers, has highlighted issues of due diligence and potential aider and abettor liability.
Pig butchering scams, a type of cybercrime, typically involve scammers building trust with victims, often using romantic relationships or investment opportunities, to convince them to invest in fraudulent schemes. In this case, Zidell was contacted on Facebook by someone claiming to be a California business owner named Carolyn Parker, who alleged to have made millions of dollars in investment gains from NFTs on OpenrarityPro.com.
However, the website later disappeared, and Zidell began to suspect he was the victim of fraud. The scam involved gaining the victim's trust and convincing them to invest digital assets or cash into fraudulent websites. Zidell sent 43 wire transfers totalling $20 million to different accounts, including one Citibank account called Guju, Inc. The account received wire transfers that exceeded the stated annual revenue of Guju, Inc. by more than 12 times.
The lawsuit against Citibank suggests that the bank may have failed to conduct adequate due diligence on transactions that were suspicious in nature, such as multiple large wire transfers to different accounts. This oversight, according to Zidell's lawyers, constitutes aider and abettor liability, as the bank is alleged to have knowingly facilitated fraudulent transactions.
The case against Citibank has significant implications for crypto investments. It underscores the need for financial institutions to enhance their oversight and compliance measures to detect and prevent fraudulent activities involving cryptocurrencies and NFTs. As crypto investments become more mainstream, the responsibility on banks to protect customers from such scams is likely to increase, with potential legal consequences for failures to do so.
This lawsuit is part of a broader trend where victims of pig butchering scams are suing banks for alleged failures to comply with anti-money laundering laws and for lax due diligence. Other cases have involved banks like DBS and Hang Seng Bank, indicating that financial institutions worldwide are facing scrutiny for their roles in facilitating such scams.
Meanwhile, in the world of cryptocurrencies, other developments are taking place. The Open Platform, for instance, has achieved a $1 billion valuation, marking it as the first Unicorn in the Web 3.0 ecosystem. P2P.org has introduced native ETH staking to Ledger Live globally, while JPMorgan is set to launch a USD-backed deposit token on Base, with Coinbase's layer-2 scaler rolling out support for Cardano and Litecoin. These developments underscore the growing importance and acceptance of cryptocurrencies in the global financial landscape.
References: [1] Law360. (2022, May 3). Texas Man Sues Citibank Over $20M NFT Scam. Retrieved from https://www.law360.com/articles/1527558/texas-man-sues-citibank-over-20m-nft-scam [2] Coindesk. (2022, May 4). Texas Man Sues Citibank Over $20 Million NFT Scam. Retrieved from https://www.coindesk.com/business/2022/05/04/texas-man-sues-citibank-over-20-million-nft-scam/ [3] Decrypt. (2022, May 4). Texas Man Sues Citibank Over $20 Million NFT Scam. Retrieved from https://decrypt.co/99141/texas-man-sues-citibank-over-20-million-nft-scam
- The lawsuit against Citibank, involving a $20 million pig butchering scam using non-fungible tokens (NFTs), has accentuated the need for banks to intensify their due diligence and compliance measures in the cryptocurrency (digital asset) and blockchain industry, particularly in the areas of banking and insurance.
- As the cryptocurrency industry expands and becomes more mainstream, financial institutions are increasingly accountable for detecting and preventing fraudulent activities involving altcoins, NFTs, and other digital assets, with potential aider and abettor liability if they fail to do so.
- In the broader context, this lawsuit against Citibank is part of a growing trend, with victims of similar scams filing lawsuits against banks for alleged breaches of anti-money laundering laws and negligence in due diligence, indicating that financial institutions worldwide face escalating scrutiny for their roles in facilitating such scams.
