A Texas investor, Michael Zidell, is suing East West Bank and Cathay Bank, as well as Citibank, for “allowing” a $20 million "pig butchering" NFT scam.
Zidell claims the banks ignored obvious red flags over 43 transfers worth $20 million from his family trusts.
The scam started with a romance-based online relationship that quickly turned into an NFT investment scam.
The lawsuits against East West and Cathay Banks carry severe consequences under California law.
The Texas investor who sued Citibank recently is now taking two more major banks to court.
Michael Zidell, who says he was scammed out of millions through a romance-based NFT investment scheme is now dragging East West Bank and Cathay Bank to court.
According to Zidell’s complaints, Citibank and both of these other banks ignored obvious red flags and allowed scammers to steal millions from his family trusts.
This legal action comes just days after the Citibank lawsuit, and here are the details of Zidell’s complaints.
According to court filings, the saga began in early 2023 when Zidell was contacted by a woman named “Carolyn Parker” on Facebook.
Parner claimed to be a successful business woman, and reportedly struck up an online romantic relationship with Zidell.
As it is with all pig butchering scams, this relationship soon turned financial.
Within a month, Parker told Zidell she had made a fortune investing in NFTs. She also encouraged him to do the same and directed him to a trading platform that appeared to offer NFT investment services.
Zidell trusted her advice and began transferring funds to bank accounts listed by the platform.
Over the next few months, Zidell made a total of 43 transfers to accounts at various banks.
In total, he sent more than $20 million, and then, without warning, the platform disappeared in April of 2023 along with all his funds.
The website was taken offline, and Parker vanished from his life.
According to Zidell’s legal complaints, the fraud could not have succeeded without the cooperation, or at the very least, the negligence of the banks involved.
According to his latest lawsuits, Zidell claims that East West Bank processed 18 wire transfers from him, worth nearly $7 million.
Zidell sues two more banks | Source: Twitter
Cathay Bank, on the other hand, handled another 13 transfers that were worth over $9.7 million.
These lawsuits are similar to complaints that Zidell filed against Citibank on June 24, in which he alleged that the bank allowed scammers to receive 12 transfers worth $4 million without raising any red flags.
Combined, Zidell claims the three banks “allowed” the scammers to drain over $20 million from his family trusts.
According to the suit, Zidell says that the banks “turned a blind eye” to suspicious activity and failed to act on transactions that were clearly fraudulent.
“The large, round-number wire transfers, the rapid frequency of deposits, and the lack of business justification should have triggered alarms,” the complaint states.
The lawsuit also includes a more serious claim not found in the Citibank suit, that both East West and Cathay Banks aided and abetted elder abuse.
Even though Zidell’s age isn’t mentioned in the complaint, California law considers anyone aged 65 and older as an elder.
Because of this, institutions found liable for elder abuse can face severe consequences.
If Zidell succeeds in court, all banks involved could be looking at some serious legal and financial risks.
The lawsuits also raise some bigger issues about the responsibilities of banks in preventing crypto-related fraud.
Banks are mostly required to monitor for suspicious transactions and report suspected financial crimes under the Bank Secrecy Act and other regulations.
However, critics argue that these institutions sometimes fail to act quickly or well enough, especially in fast-moving areas like NFTs and crypto.
According to Zidell’s complaint, East West and Cathay Banks had a clear duty to intervene when they detected suspicious behavior.
They, however, failed to do so, and their inaction led to the success of the fraud.
Zidell is demanding compensatory damages to recover the stolen funds, alongside reimbursement of legal costs and even more interest.
While Zidell’s claims still need to be tested in court, the case may set the tone for how U.S. courts demand that banks prevent digital asset fraud.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.