Three Asian banks are facing a lawsuit for allegedly failing to safeguard a customer against a $1 million cryptocurrency scam by ignoring essential Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols.
A California resident has initiated legal action against Hong Kong-based Fubon Bank Limited and Chong Hing Bank Limited, as well as Singapore-based DBS Bank, following a substantial crypto scam that resulted in a loss of nearly $1 million via accounts maintained by these banks.
The scam, known as pig butchering, involves deceiving victims by posing as a romantic interest or trustworthy connection to gain their confidence before leading them to invest in fraudulent cryptocurrency ventures.
According to the lawsuit filed on December 31, the victim was ensnared by these tactics after being contacted through LinkedIn in June 2023 with a promising cryptocurrency investment proposal.
Over a span of several months, he was convinced to transfer close to $1 million to purported accounts at Fubon Bank, Chong Hing Bank, and DBS Bank, believing that his investments would be securely managed.
The lawsuit contends that the banks did not conduct sufficient KYC and AML checks, which could have identified suspicious activities and potentially mitigated the fraud.
Additionally, the suit alleges that the banks breached the U.S. Bank Secrecy Act, as DBS Bank has a branch in California, while Fubon Bank and Chong Hing Bank allegedly facilitated transactions through the victim’s U.S.-based Wells Fargo account, placing them under the local financial regulations.
The U.S. Bank Secrecy Act mandates that financial institutions actively monitor, document, and report any suspicious transactions to avert fraud and money laundering.
Four Hong Kong-based companies—Richou Trade Limited, FFQI Trade Limited, Xibing Limited, and Weidel Limited—are also implicated for allegedly opening accounts in the victim’s name and unlawfully rerouting the transferred funds to third-party accounts.
The victim is pursuing a minimum of $3 million in damages, attributing responsibility for his financial losses to both the banks and the involved entities.
Pig butchering scams emerged as the most significant threat in 2024, with recent reports indicating that over $3.6 billion was lost in the crypto sector due to these fraudulent schemes.
While many victims find themselves with depleted funds and little recourse, some are determined to seek justice through legal channels. In a related case, a U.S. citizen recently filed a lawsuit after losing 33 Bitcoin in a similar pig butchering scam reportedly orchestrated by a Southeast Asian crime syndicate.
