Court Rules Santander Not Liable for $751,000 Crypto Scam Loss

On April 18, 2025, a Massachusetts appellate panel concluded a peculiar dispute involving customer Lourenco Garcia, who sought to hold Santander Bank accountable for $751,000 lost in a crypto scam. The court ruled that neither the bank’s customer agreement nor state law obligates Santander to block or flag customer-authorized transfers, even in cases of suspected fraud.

Between December 2021 and January 2022, Garcia used his checking and savings accounts to make two debit-card purchases and seven wire transfers to Metropolitan Commercial Bank of New York. These funds were then used to purchase cryptocurrency on Crypto.com and a purported platform called CoinEgg. Garcia later discovered that CoinEgg was a scam, resulting in the loss of his entire $751,000.

Garcia filed a lawsuit against Santander for breach of contract, negligent misrepresentation, and violation of Massachusetts consumer-protection law. His argument was that the bank should have identified and halted the high-risk transactions. However, the appeals court rejected each of Garcia's claims. The court noted that the customer agreement states Santander “may” intervene when it suspects fraud, but imposes no duty to do so. Additionally, state regulators have not created a legal obligation for banks to police every transaction.

Garcia also claimed that Santander’s website promises to “contact a customer” about suspicious activity, which he argued created binding duties. However, the court determined that the bank would not have this liability since Garcia himself authorized all transfers and never raised concerns until after his loss.

While the unpublished decision carries limited precedential weight, it sends a clear message: banks are not insurers against personal investment losses. At a time when crypto scams are surging and regulatory levies are increasing, institutions will rely on precise contractual language to define their responsibilities. Customers must adopt due diligence and fraud-protection measures when moving six-figure sums into high-risk digital assets.

Garcia’s two-year effort to recover his funds ended in misfortune. He filed the original complaint in October 2022. With both the Superior Court and appellate court siding with Santander, this legal saga concludes as an instructive footnote on the limits of bank liability in customer-initiated crypto transactions.