Citibank Sued Over $20 Million Crypto Scam Involving NFTs

Citibank is currently embroiled in a federal lawsuit filed in Manhattan by Michael Zidell, who alleges that the bank overlooked critical warnings and failed to intervene in a $20 million cryptocurrency scam. The scam involved fake NFT investments and was orchestrated by individuals who had accounts at Citibank. Zidell claims that he transferred $20 million to scammers posing as crypto partners, and that the scam utilized fake personas and involved NFT investments. The lawsuit highlights potential deficiencies in banks' due diligence processes, raising concerns about institutional responsibility in preventing crypto-related scams.

The incident underscores the growing trend of romance scams exploiting cryptocurrencies, particularly NFTs. While Citibank and industry leaders remain silent, the community debates heightened vigilance in identifying suspicious activities. The lawsuit points to potential lack of scrutiny, as nearly $4 million was channeled through these accounts without intervention. Zidell's allegations suggest that Citibank processed 12 transfers totaling around $4 million to a company called Guju Inc., despite numerous red flags that should have triggered an investigation. The complaint alleges that Citibank failed to implement adequate security measures, detect suspicious transactions, and monitor accounts where large, round sums were transferred in and out. Zidell accuses the bank of negligence and aiding and abetting the scam, stating that Citibank had a duty to exercise due care in monitoring suspicious transactions. The complaint highlights that the bank's inaction allowed the scammers to make off with millions of dollars, leaving Zidell with significant financial losses.

This case serves as a stark reminder of the elaborate nature of romance scams, which have become a multibillion-dollar swindle. The anonymity of online platforms and the complexity of these scams make it difficult for victims to recover their losses. The lawsuit against Citibank underscores the responsibility of financial institutions to protect customers from such fraudulent activities. As the use of cryptocurrencies and NFTs continues to rise, it is crucial for banks to enhance their security measures and vigilance to prevent similar incidents in the future. The event mirrors previous crypto scams involving fictitious investments, with the FBI noting $5.6 billion losses in 2023. Such scams often pivot around BTC, ETH, and NFTs. Experts suggest that banks may need to implement more rigorous fraud detection systems, emphasizing the increasing complexity of scams that leverage crypto's pseudonymous nature to evade detection.