Michael Zidell’s Lawsuit Against Citibank
In a significant lawsuit lodged on Tuesday in Manhattan federal court, Michael Zidell has accused Citibank of negligence that led to his loss of $20 million in a crypto romance scam. Zidell, claiming to be a victim of the scheme, insists that the bank failed to heed obvious warning signs while he transferred funds to con artists posing as legitimate investors.
The Nature of the Scam
According to the case, Zidell transferred this staggering amount through several transactions across different banks, a portion of which—approximately $4 million—was deposited into accounts at Citibank.
The lawsuit sheds light on the intricate nature of this scam, known as ‘pig butchering’, where scammers cultivate fake romantic relationships online to defraud unsuspecting victims into investing large sums of money. In Zidell’s instance, the fraud began in early 2023 when he was approached on Facebook by a woman named ‘Carolyn Parker.’ Initially, Zidell perceived their interactions as friendly and even romantic over time. Parker lured him into investing in non-fungible tokens (NFTs) after sharing her exaggerated success in this area and directing him to a trading platform.
Details of the Transactions
Zidell complied and made numerous deposits into various bank accounts provided by this platform, which he was informed required multiple banks to handle the volume of transactions. Over several months, he executed 43 transactions totaling more than $20 million. However, his efforts turned to despair when he discovered that the trading platform vanished alongside his investments by late April, prompting him to file the lawsuit against Citibank.
Allegations Against Citibank
The complaint specifically details how Citibank processed multiple transfers, including 12 transactions amounting to $4 million that were directed to a company named Guju Inc. Zidell alleges that the bank failed to exercise sufficient oversight, neglecting several red flags that should have initiated an inquiry into these dubious transactions. The lawsuit argues that the bank’s lack of adequate security measures and failure to monitor suspicious activity contributed to the successful execution of the scam.
Broader Implications of Romance Scams
This rarely encountered scenario has put Citibank in a contentious position, raising questions about their responsibility in preventing fraud. In a broader context, romance scams pose a serious threat with billions of dollars lost each year. The security firm Cyvers reported that these scams accounted for over $5.5 billion in losses in just the previous year across 200,000 identified incidents. Meanwhile, data from Chainalysis indicates that all forms of crypto-related scams could result in losses totaling around $9.9 billion in 2024. Furthermore, authorities have reported seizing $225 million linked to these types of scams, as part of efforts led by the Secret Service, highlighting the urgency and scale of such fraudulent activities.
