Citibank Sued Over $20 Million Crypto Scam

Michael Zidell has filed a lawsuit against Citibank in Manhattan federal court, alleging that the bank's negligence allowed him to fall victim to a $20 million cryptocurrency scam that began earlier this year. The lawsuit claims that Citibank processed 43 transactions totaling $20 million to fraudulent accounts linked to fake NFTs, despite repeated suspicious alerts on these transactions. The scammers, using the alias "Carolyn Parker," persuaded Zidell to invest in NFT ventures through Facebook, resulting in significant fund diversions.

The case highlights potential gaps in anti-money laundering protocols and broader issues in the banking industry's response to cryptocurrency fraud. Citibank is accused of ignoring potential fraud warnings associated with large transactions, leading to massive financial losses for Zidell. The lawsuit emphasizes the need for vigilant regulatory and institutional compliance measures to prevent such scams in the future.

Public reactions to the lawsuit echo concerns over lessening investor trust in conventional financial entities. While no official statements from Citibank or industry leaders have been issued, crypto communities on platforms like Twitter and Reddit are urging bolstered banking oversight. The incident underscores the ongoing need for enhanced compliance measures in banking, particularly in fiat-to-crypto domains, to fend off fraudulent schemes.

Pig butchering scams, which often involve elaborate social engineering tactics, have ensnared victims since at least 2023, affecting traditional financial institutions like Citibank rather than crypto platforms themselves. The lawsuit against Citibank serves as a critical look at institutional oversight in cryptocurrency fraud situations, emphasizing the importance of robust anti-money laundering systems across financial institutions.