A California resident has filed a lawsuit against three Asia-based banks, accusing them of negligence for failing to prevent a cryptocurrency scam that resulted in a loss of nearly $1 million. The lawsuit, filed in a California district court on December 31, 2024, claims that the banks did not conduct the necessary due diligence to detect and prevent fraudulent activity, allowing scammers to deceive the plaintiff over several months.
The plaintiff, Ken Liem, alleges he was targeted by a “pig butchering” scam, a type of online fraud where victims are lured with promises of high returns on cryptocurrency investments. According to the lawsuit, Liem was initially contacted in June 2023 by individuals posing as representatives of a profitable cryptocurrency investment opportunity through LinkedIn.
Scammers Manipulate Victim into Transferring Funds
Liem’s legal team claims that the fraudsters were able to convince him to transfer large sums of money under the pretense that the funds would be used for investments. The lawsuit states that the money was sent to accounts at Fubon Bank Limited and Chong Hing Bank Limited in Hong Kong, as well as Singapore-based DBS Bank Limited. From there, the funds were subsequently moved to third-party accounts, making it difficult to trace the money trail.
Liem’s attorneys argue that the banks failed to apply adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, which should have raised alarms about the suspicious nature of the transactions. A basic review of the account holders involved in the transfers would have revealed that they had no legitimate business activities, the suit asserts.
“The banking defendants appear to have turned a blind eye to illicit funds flowing from the United States to various Asian entities whose accounts they managed,” the lawsuit reads. “By doing so, they facilitated the transfer of millions of dollars, funding pig-butchering scams.”
Alleged Violations of U.S. Bank Secrecy Act
In addition to negligence claims, the lawsuit accuses the three banks of violating the U.S. Bank Secrecy Act, which requires financial institutions to report suspicious activity and maintain detailed transaction records. Liem’s legal team contends that the banks failed to uphold these obligations, thereby allowing the fraudulent transactions to go unnoticed.
Since DBS has a branch in California and Fubon and Chong Hing processed transactions through Liem’s U.S.-based Wells Fargo account, the lawsuit asserts that the banks are subject to U.S. jurisdiction. This could potentially allow U.S. regulatory authorities to take action against the banks for their role in facilitating the fraud.
The lawsuit also names four Hong Kong-based companies—Richou Trade Limited, FFQI Trade Limited, Xibing Limited, and Weidel Limited—that are accused of unlawfully diverting Liem’s funds to third parties while falsely promising cryptocurrency investment returns.
Plaintiff Seeks $3 Million in Damages
Liem is seeking at least $3 million in damages and a jury trial. The case highlights the growing concern over fraud within the cryptocurrency sector, particularly scams targeting unsuspecting investors.
In 2024, the crypto industry saw $1.49 billion in total losses due to hacks and fraud, a 17% decrease from the previous year. According to blockchain security platform Immunefi, hacks accounted for 98.1% of these losses, while fraud—including scams like the one Liem fell victim to—represented just 1.9%. However, the amount lost to fraud saw a significant 72% year-on-year increase.
Despite a decline in the number of successful hacks, with the number of attacks falling by 27.5% from 2023 to 2024, the rise in fraud cases has sparked calls for greater oversight and accountability within the cryptocurrency space.
Liem’s lawsuit may set an important precedent, signaling that financial institutions, especially those handling international transactions, must take a more active role in preventing crypto-related fraud.