A California resident has filed a lawsuit against three Asia-based banks, accusing them of negligence in preventing a cryptocurrency scam. The victim alleges that the banks’ failure to act led to a nearly $1 million loss. The legal action, filed on December 31, 2024, in a California district court, claims the banks did not conduct necessary due diligence, allowing fraudsters to deceive the victim for months.
Scam Targeting Begins on LinkedIn
Ken Liem, the plaintiff, claims he became a victim of a “pig butchering” scam after scammers contacted him on LinkedIn. In June 2023, these individuals pretended to be representatives of a profitable cryptocurrency investment. They convinced Liem to transfer large sums, promising they would invest the funds on his behalf.
Funds Transferred to Third-Party Accounts
Liem’s legal team claims that the funds were deposited into accounts at Fubon Bank Limited, Chong Hing Bank Limited (both based in Hong Kong), and DBS Bank Limited (based in Singapore). The scammers moved the funds to third-party accounts, complicating the fraud. Liem’s attorneys argue that the banks failed to perform essential Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which could have flagged the suspicious activity.
Banks’ Negligence in Transaction Monitoring
Liem’s attorneys believe a basic review of the accounts and activities would have exposed the fraudulent nature of the transactions. They argue that the banks ignored the movement of illicit funds from the U.S. to Asian entities under their management, facilitating the scam and the extraction of millions of dollars.
Violation of U.S. Bank Secrecy Act
The lawsuit also accuses the banks of violating the U.S. Bank Secrecy Act. This law requires financial institutions to report suspicious activities and keep transaction records. Liem’s attorneys contend that, because DBS has a branch in California and Fubon and Chong Hing processed transactions through Liem’s U.S.-based Wells Fargo account, the banks fall under U.S. jurisdiction.
Hong Kong Entities Accused of Fraud
Along with the banks, the lawsuit names four Hong Kong-based companies: Richou Trade Limited, FFQI Trade Limited, Xibing Limited, and Weidel Limited. These companies allegedly diverted Liem’s funds to third parties while falsely claiming they would be used for cryptocurrency investments.
Liem Seeks $3 Million in Damages
Liem seeks at least $3 million in damages and a jury trial.
Crypto Industry Faces Decline in Fraud Losses
The cryptocurrency industry saw $1.49 billion in losses due to hacks and scams in 2024, down 17% from 2023. Blockchain security platform Immunefi reports that hacks accounted for $1.47 billion of the losses. Fraud, including rug pulls, made up just 1.9% of the total, although fraud cases rose 72% compared to the previous year.
Security Improvements Lead to Fewer Attacks
Improved security measures contributed to the decline in crypto losses. The number of successful attacks dropped by 27.5%, from 320 in 2023 to 232 in 2024.
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