Citibank Faces $20 Million Lawsuit Over Romance Scam Losses

Citibank is currently facing a $20 million lawsuit filed by a Texas resident, Michael Zidell, who alleges that the bank's negligence led to significant financial losses due to a romance scam. The scam, which took place between January and April 2023, involved the use of fake personas and non-fungible token (NFT) investments. Zidell claims that Citibank processed nearly $4 million in suspicious transactions, which were funneled through multiple bank accounts, raising concerns over the bank's monitoring processes.

The lawsuit highlights the challenges financial institutions face in detecting sophisticated scams and raises questions about the effectiveness of banks' anti-fraud measures. The plaintiff's legal filing states that "Citibank turned 'a blind eye to its statutory duties and obligations' when it allowed [the victim] to deposit millions of dollars to scammers who have accounts at the bank." This incident underscores the growing issue of romance scams in the cryptocurrency space and the potential liability of financial institutions in preventing such fraudulent activities.

The scam involved 43 bank transfers across multiple accounts, with no major crypto assets directly impacted. The lawsuit suggests that these transactions should have triggered suspicion under anti-money laundering protocols, implying that financial institutions may face increased scrutiny and pressure to enhance fraud prevention measures. The outcome of this lawsuit could set a precedent for how banks are held accountable for their role in facilitating crypto scams.

This case is part of a broader trend in banking-related vulnerabilities, as romance scams linked to cryptocurrency have seen significant losses, with $9.9 billion tallied in 2024 alone. The growing danger and sophistication of pig butchering scams have been highlighted, emphasizing the need for collaboration with large financial institutions for effective asset tracing and seizure. The lawsuit against Citibank serves as a reminder of the importance of robust anti-fraud measures and the potential consequences for financial institutions that fail to adequately protect their customers from sophisticated scams.