Citibank is embroiled in a legal battle as a plaintiff accuses the bank of negligence, claiming it failed to flag suspicious transactions linked to a cryptocurrency romance scam that ultimately cost him $20 million.
Key Points:
Citibank is being sued for its alleged oversight in identifying suspicious financial transfers connected to a $20 million romance scam involving cryptocurrencies.
The plaintiff, Michael Zidell, claims the bank neglected various warning signs, such as large, round-figure transactions made to dubious entities.
This case reflects the increasing demands on financial institutions to enhance their capabilities in detecting and preventing fraud in the digital asset space.
Legal documents filed in a Manhattan federal court on Tuesday outline claims that Citibank acted negligently and enabled fraudsters by failing to respond to clear warning signs.
Zidell asserts that the bank permitted him to transfer nearly $4 million to the scammers without issuing any alerts, despite evident indicators of questionable activity.
$20M Crypto Scam Linked to Citibank Enters Courtroom
The lawsuit states that Zidell was targeted by a “pig butchering” scam—a type of fraud where perpetrators engage victims in fabricated online romantic relationships to entice them into investing in fraudulent schemes.
This particular scam reportedly began when a woman identifying herself as “Carolyn Parker” reached out to Zidell via Facebook in early 2023.
Parker, presenting herself as a prosperous businesswoman, developed what Zidell describes as a romantic connection.
She convinced him to invest in NFTs through a trading platform she promoted.
Over a span of several months, Zidell executed 43 wire transfers totaling more than $20 million across various banks, with 12 transfers, amounting to $4 million, funneled through Citibank to a company named Guju Inc.
Zidell’s claims suggest that Citibank failed to investigate several warning signs related to the Guju Inc. account, including unusually high and round-number transfers from diverse individuals and trusts.
He contends that these patterns warranted enhanced due diligence in accordance with established anti-money laundering regulations.
According to the complaint, “Citibank turned a blind eye to its statutory duties and obligations,” indicating that the bank did not monitor Guju’s activities despite overt indications of potential fraud.
Zidell is seeking damages for negligence, asserting that banks like Citibank have a responsibility to do more to protect clients from increasingly complex fraud schemes that leverage digital assets.
Rise in Romance Crypto Scams
There has been a notable increase in romance-centric crypto scams in recent years. Data from Cyvers indicates that these scams resulted in more than $5.5 billion in losses last year through approximately 200,000 incidents.
Chainalysis reported a staggering $9.9 billion in total crypto scam losses for 2024, a trend that shows signs of escalation.
This month, US authorities disclosed the confiscation of $225 million associated with pig butchering schemes, marking the most significant crypto seizure in the history of the Secret Service.
@NASAA identifies crypto and social media scams as major threats in 2025, with scammers utilizing AI and emotional tactics to mislead investors. #CryptoScams #SocialMedia #AIhttps://t.co/T4A9oSXJ4m
— Finance Newso.com (@Finance Newso) March 7, 2025
Moreover, Coinbase played a pivotal role in a significant crypto seizure operation orchestrated by the US Secret Service, aiding in the recovery of $225 million in USDT that was stolen through pig butchering scams.
This initiative began with Tether freezing 39 suspicious wallets and grew into a concerted effort involving Coinbase experts who tracked fraudulent crypto transactions and identified over 130 victims.
The embezzled funds were linked to operations conducted by criminal organizations based in Southeast Asia, frequently involving individuals who were trafficked and coerced into assisting under threat of violence.
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