Crypto Scam Victim Sues Banks for $20 Million Loss

Michael Zidell, a victim of a sophisticated crypto scam, has filed lawsuits against East West Bank and Cathay Bank, alleging that the institutions failed to detect and prevent fraudulent transactions that resulted in a loss of $20 million. This legal action follows a previous lawsuit filed against Citibank on June 24, 2025, in New York, where Zidell claimed that the bank also neglected to flag suspicious activities.

According to the lawsuits, Zidell sent approximately $7 million in 18 bank transfers to an account at East West Bank and over $9.7 million in 13 transfers to Cathay Bank. These transactions occurred after $4 million was wired into Citibank accounts, totaling $20 million lost in a pig butchering scam. The lawsuits, filed in a federal court in California on July 1, 2025, allege that the banks did not investigate suspicious activity despite receiving large transactions of round sums that should have triggered investigations.

The fraud began in January 2023 when Zidell received a message on Facebook, purportedly from Carolyn Parker, a businesswoman. Over months of WeChat video calls and messaging, Parker gained Zidell's trust and persuaded him to invest in a bogus NFT site, OpenrarityPro.com. In April 2023, the website was taken down, and Zidell’s funds became inaccessible.

Legal documents filed by Zidell assert that the banks failed to comply with their federal Know Your Customer and Anti-Money Laundering requirements. He claims that the banks allowed the fraudsters to operate freely by opening accounts and transferring money without questioning the legitimacy of the transactions. The lawsuits seek compensatory damages and legal fees.

In contrast to the Citibank case, Zidell's lawsuits against East West and Cathay Bank include allegations of encouraging elder abuse, although his age is not specified. California law protects individuals aged 65 and above from such forms of abuse, suggesting that Zidell might fall into this category. The complaints allege that the banks acted irresponsibly, allowing scammers to exploit Zidell due to the lack of detection of obvious anomalies in large transactions.

For instance, Citibank sent 12 transfers to Guju Inc., a company whose account documentation indicated that it would not exceed monthly wire activity of $250,000. The initial transfer made by Zidell was larger than the annual revenue claimed by Guju, yet the bank apparently ignored this discrepancy. Similarly, East West and Cathay Bank failed to control high-value transfers, allowing the scam to continue unchecked.

Zidell contacted the Dallas Police Department and the FBI regarding the scam, but progress has been limited. The most significant seizure made by the Secret Service targeted cryptocurrencies worth $225 million linked to similar fraudulent schemes. The lawsuits underscore the increasing pressure on banks to enhance their fraud detection capabilities. The case of Zidell could set a new precedent, holding financial institutions accountable for failing to protect their customers against advanced crypto-related fraud.