Man Loses $20 Million in Crypto Romance Scam, Sues Three Banks

A California man, who lost over $20 million in a sophisticated crypto romance scam, has expanded his legal battle to include three prominent U.S. banks. The plaintiff, Michael Zidell, alleges that these banks enabled the fraud through negligence and failure to detect red flags. Following a lawsuit filed against Citibank in June, Zidell has filed a second lawsuit this week against East West Bank and Cathay Bank, accusing all three of aiding and abetting the scam through reckless oversight and disregard for anti-fraud obligations.

Zidell claims that between early 2023 and April of that year, he was manipulated into transferring millions of dollars to accounts controlled by scammers posing as a romantic interest and successful NFT investor. The scam was orchestrated through a fake trading platform that eventually vanished, along with Zidell’s funds. The lawsuits, filed in federal court in California, highlight bank compliance failures and raise broader concerns about the role of traditional financial institutions in enabling large-scale crypto-related fraud.

Zidell made a total of 43 transfers amounting to more than $20 million to accounts provided by the fraudulent trading platform. Of these, $4 million was sent to Citibank in 12 separate transfers, $6.9 million was sent to East West Bank via 18 transfers, and $9.7 million was transferred to Cathay Bank through 13 transactions. In each case, Zidell contends the banks should have identified multiple red flags, including large round-number transactions, frequent transfers to accounts with no prior history, and clear indicators of a potential pig butchering-style scam.

The scam began in early 2023 when Zidell was contacted on Facebook by a woman calling herself "Carolyn Parker," who claimed to be a successful business owner. After establishing a romantic relationship, Parker introduced Zidell to a supposedly lucrative NFT trading platform, saying she had earned millions in digital asset investments. Parker encouraged Zidell to invest via the platform and guided him through a series of wire transfers to multiple banks, supposedly needed to process large client volumes. The entire operation unraveled by April 2023, when the website and Parker disappeared simultaneously.

Zidell's complaints against East West Bank and Cathay Bank mirror the claims made against Citibank. He accuses the institutions of negligence in failing to investigate and halt suspicious transactions, aiding and abetting securities fraud by providing banking services and infrastructure to the scammers, and aiding and abetting elder financial abuse. While Zidell’s age is not publicly disclosed, California law defines “elder” as any individual aged 65 and older. His legal team argues that the banks had a duty under state law to protect elderly clients from financial exploitation and failed to do so.

The lawsuits raise difficult questions about the liability of traditional banks in the rapidly evolving landscape of digital asset fraud. While banks are typically bound by robust AML and know-your-customer rules, critics argue that enforcement is often inconsistent, particularly when it comes to complex fraud schemes that exploit online platforms and social engineering. In Zidell’s case, the volume, frequency, and destination of the wire transfers, coupled with the anonymity of the counterparties, would likely have triggered enhanced due diligence under most internal compliance protocols. Yet, according to the lawsuits, no such measures were taken.

Legal experts suggest the suits may spark further discussion about whether banks need stronger guidelines when handling high-volume crypto-related transactions, especially for older clients or those unfamiliar with emerging risks in digital asset markets. Zidell’s case is far from isolated. The FBI has reported over $3.9 billion in losses from investment-related fraud, with crypto scams making up a growing share. Law enforcement agencies have warned that social media platforms are being increasingly used to initiate fraudulent relationships.

While the crypto industry is often blamed for enabling fraud due to its decentralized and anonymous nature, Zidell’s lawsuits turn the spotlight onto traditional financial intermediaries. If the banks had acted sooner or flagged unusual behavior, the massive financial loss might have been mitigated, his legal team argues. Zidell is seeking compensatory damages, legal fees, and interest through a jury trial. If successful, his lawsuits could pave the way for other scam victims to pursue similar claims against banks, raising the stakes for financial institutions navigating the intersection of fiat infrastructure and the crypto economy.