Shocking $20M Crypto Romance Scam: Citibank Sued for Allegedly Ignoring Red Flags
Imagine losing $20 million to a sophisticated online scam. That’s the reality for one individual who is now suing a major bank, alleging they looked the other way. This case highlights the serious risks associated with online fraud and raises questions about the role financial institutions play in preventing such devastating losses.
Alarming Allegations in the Citibank Lawsuit
A significant Citibank lawsuit has been filed in Manhattan federal court. The plaintiff, Michael Zidell, claims the bank ignored clear signs of fraudulent activity, allowing scammers to siphon off millions. Zidell alleges he lost over $20 million in total to an elaborate scheme, with nearly $4 million passing through accounts held at Citibank.
The core accusation is that Citibank failed in its duty to monitor suspicious transactions and implement adequate security measures. The lawsuit contends that the nature and volume of the transfers should have triggered an investigation by the bank.
Understanding the Crypto Romance Scam
The alleged fraud is described as a crypto romance scam, a variation of the ‘pig butchering’ scheme. This type of scam involves criminals building a seemingly romantic or close personal relationship with a victim online over time. Once trust is established, the scammer introduces a fraudulent investment opportunity, often related to cryptocurrency or NFTs, promising high returns.
Key characteristics of this pig butchering scam often include:
- Initial contact through social media or dating apps.
- Building a long-term, emotional connection.
- Pressuring the victim to invest large sums quickly.
- Directing funds to seemingly legitimate investment platforms that are actually controlled by the scammers.
- Explaining away the need for multiple bank accounts or unusual transfer methods.
In this specific case, the scam allegedly began on Facebook and involved purported NFT investments on a platform that later disappeared.
Were There Clear Banking Red Flags?
The lawsuit specifically points to alleged banking red flags that Citibank should have identified. The complaint states that twelve transfers totaling around $4 million went to a company called Guju Inc. According to the plaintiff, the nature of these transactions was suspicious.
The complaint highlights:
- Large, round sums of money being transferred.
- Funds moving in and out of accounts from various trusts and individuals in a manner deemed suspicious.
- The sheer volume and frequency of transactions over a short period.
The plaintiff argues these factors collectively should have prompted Citibank to investigate the activity within Guju Inc.’s accounts, potentially halting further losses.
The Broader Context of Crypto Scams
This case is not isolated. Crypto scams remain a significant problem globally. Data shows that romance scams, including those involving crypto, result in billions of dollars in losses annually.
Consider these figures:
- Security firm Cyvers reported over $5.5 billion lost to romance scammers in 2023 across 200,000 cases.
- Chainalysis estimated total crypto scam losses in 2024 could reach $12.4 billion.
- US authorities recently seized $225 million tied to pig butchering scams in one operation, marking a record seizure for the Secret Service.
These statistics underscore the pervasive nature of these frauds and the challenges faced by victims and law enforcement.
Conclusion: A Wake-Up Call?
The lawsuit against Citibank serves as a stark reminder of the sophisticated methods used by scammers and the potentially devastating impact on victims. It also raises critical questions about the responsibility of financial institutions in identifying and preventing fraudulent activity, particularly as scams increasingly involve digital assets. As this legal battle unfolds, it may set precedents for how banks are expected to handle suspicious transactions linked to complex online frauds like the crypto romance scam.
