California Resident Sues Asian Banks Over $1 Million Crypto Scam

California Resident Sues Banks Over Cryptocurrency Scam

A California resident has taken legal action against three Asia-based banks for allegedly failing to carry out essential checks that allowed crypto scammers to defraud him of nearly $1 million. The lawsuit, filed in a California district court on December 31, 2024, states that the victim, Ken Liem, was approached on LinkedIn in June 2023 with a cryptocurrency investment proposal.

Details of the Lawsuit

Liem's attorneys claim that he was persuaded to transfer funds over several months to individuals posing as crypto investors. These funds were reportedly deposited into accounts at:

• Fubon Bank Limited (Hong Kong)
• Chong Hing Bank Limited (Hong Kong)
• DBS Bank Limited (Singapore)

Subsequently, these funds were transferred to various third-party accounts. According to the lawsuit, the banks neglected to perform adequate Know Your Customer (KYC) and Anti-Money Laundering checks, which could have flagged concerns about the account holders.

Allegations Against the Banks

The legal team argues that the banks likely recognized the high probability that the account holders intended to defraud victims, as a basic review would have revealed a lack of credible evidence supporting the legitimacy of their business activities. Furthermore, the lawsuit claims that the banks ignored the movement of illicit funds from the United States to various Asian entities, thereby facilitating the scams.

Regulatory Compliance Concerns

The lawsuit also emphasizes that the banks failed to comply with the US Bank Secrecy Act, which requires financial institutions to maintain detailed transaction records and report suspicious activities to the US Department of Treasury’s Financial Crimes Enforcement Network. Liem’s attorneys argue that compliance is necessary since DBS operates a branch in California, and Fubon and Chong Hing processed transactions through Liem's account at Wells Fargo.

Involvement of Other Parties

The lawsuit further targets four Hong Kong-based entities:

• Richou Trade Limited
• FFQI Trade Limited
• Xibing Limited
• Weidel Limited

These companies are accused of unlawfully diverting Liem's funds to third-party accounts while falsely claiming that the money was to be used for cryptocurrency investments.

Seeking Justice

Liem's legal team is pursuing a jury trial, seeking a minimum of $3 million in damages due to the financial losses incurred. As of now, Fubon Bank Limited, Chong Hing Bank Limited, and DBS Bank Limited have not commented on the lawsuit, and attempts to reach the Hong Kong-based entities have been unsuccessful.

Understanding Cryptocurrency Scams

This case highlights the urgent need for banking institutions to enhance their fraud prevention measures. The proliferation of cryptocurrency scams, particularly schemes like "pig butchering," calls for banks to remain vigilant and robust in their KYC and AML compliance efforts.

Conclusion

The lawsuit filed by Ken Liem serves as a stark reminder of the challenges faced in the realm of cryptocurrency and the responsibilities held by financial institutions to protect their customers from fraudulent activities.