After falling victim to a nearly $1 million crypto scam,a California resident is suing three Asia-based banks, accusing them of neglecting basic checks that could have prevented the fraud.
The plaintiff, Ken Liem, filed the lawsuit on December 31, 2024, in a California court.
$1 Million Crypto Fraud Sparks Lawsuit
The attorneys said that Liem was duped in a “pig butchering” scam. In June 2023, the scammers contacted him via LinkedIn with an offer to invest in cryptocurrency.
“Pig butchering” is a type of cryptocurrency scam that is different from traditional crypto fraud in its methods. The term is a metaphor that refers to the process of slowly fattening up a pig before it is slaughtered. Similarly, in this scam, fraudsters slowly build trust with their victims over time before ultimately deceiving them.
Over several months, Liem transferred large sums to individuals posing as crypto investors. He assumed that the individuals would use funds for investments.
According to Liem‘s legal team, the funds were transferred to three Asian banks: Hong Kong’s Fubon Bank Limited, Chong Hing Bank Limited, and Singapores DBS Bank Limited. The alleged scammers then transferred the funds to third-party accounts.
Liems lawyers argue that the banks failed to carry out adequate checks, including Know Your Customer (KYC) and Anti-Money Laundering (AML). This could have flagged suspicious activity and prevented the fraudsters from opening accounts.
The banks failed to report illicit funds moved from the United States to various Asian entities whose accounts they managed. As a result, the banks apparently helped move millions for illegal purposes.
Additionally, the suit accuses the banks of violating the US Bank Secrecy Act. The Act says that financial institutions must report suspicious activities and maintain detailed transaction records.
Since DBS operates a branch in California, the bank is subject to the act. Similarly, Fubon and Chong Hing processed transactions through Liems U.S.-based Wells Fargo account.
Liem is seeking a jury trial and a minimum of $3 million in damages.
Separately, the news comes as crypto hacks and frauds led to over $2.3 billion in losses in 2024. Another disturbing trend was the prevalence of “Pig Butchering” scams. These elaborate fraud schemes swindled over $3.6 billion from unsuspecting users.
“The surge in access control breaches and sophisticated scams like Pig Butchering underscores the importance of implementing AI-powered risk assessment, transaction validation, and anomaly detection tools. Security must evolve to stay ahead of increasingly complex and coordinated attack,” Web3 security firm Cyvers told BeInCrypto.