California Resident Sues 3 Asia-Based Banks for Failing to Prevent Crypto Scam Resulting in $1M Loss
A California resident has filed a lawsuit against three Asia-based banks, accusing them of negligence in preventing a cryptocurrency scam that led to a loss of nearly $1 million.
The legal action, filed in a California district court on December 31, 2024, claims that the banks failed to perform essential due diligence, allowing fraudsters to deceive the victim over several months.
The plaintiff, Ken Liem, alleges that he became a target of a “pig butchering” scam after being contacted on LinkedIn in June 2023 by individuals posing as representatives of a lucrative cryptocurrency investment opportunity.
Scammers Convinced Victim to Transfer Large Sums
According to Liem’s attorneys, he was persuaded to transfer large sums of money to the scammers, who convinced him they would invest the funds on his behalf.
The suit claims that the money was deposited into accounts at Fubon Bank Limited and Chong Hing Bank Limited, both based in Hong Kong, as well as DBS Bank Limited, which operates in Singapore.
The funds were then transferred to third-party accounts, further complicating the trail of fraud.
Liem’s legal team argues that the banks failed to implement adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which should have raised red flags about the suspicious nature of the transactions.
The attorneys contend that a basic review of the account holders and their activities would have shown that their operations lacked credible evidence of being lawful or legitimate.
“Banking Defendants appear to have turned a blind eye toward illicit proceeds moving from the United States to a range of Asian entities whose accounts they managed,” the lawsuit states.
“They thus facilitated the extraction of millions of dollars, funding pig-butchering scams.”
The lawsuit also alleges that the banks violated the U.S. Bank Secrecy Act, which mandates financial institutions to report suspicious activity and maintain detailed records of transactions.
Victim Argues Asia Banks Are Subject to U.S. Jurisdiction
Since DBS has a branch in California and Fubon and Chong Hing processed transactions through Liem’s U.S.-based Wells Fargo account, Liem’s attorneys argue that the banks are subject to U.S. jurisdiction and regulatory oversight.
In addition to the banks, the suit names four Hong Kong-based entities—Richou Trade Limited, FFQI Trade Limited, Xibing Limited, and Weidel Limited—that are accused of unlawfully diverting Liem’s funds to third parties while falsely claiming they would be used for cryptocurrency investments.
Liem is seeking at least $3 million in damages and a jury trial.
As reported, the crypto industry witnessed losses totaling $1.49 billion in 2024 due to hacks and fraud, marking a 17% decrease from 2023.
According to a report by blockchain security platform Immunefi, hacks were overwhelmingly the primary cause, accounting for $1.47 billion or 98.1% of the total losses across 192 incidents.
Fraud, including rug pulls and scams, represented just 1.9% of the losses at $28 million, though this category saw a 72% increase year-on-year.
The decline in total crypto losses reflects improved security measures, as the number of successful attacks also fell by 27.5%, from 320 in 2023 to 232 in 2024.
Source: cryptonews.com
