Citibank Faces Lawsuit Over Alleged $20M Crypto Romance Scam Ignored ‘Red Flags’

Citibank Accused of Ignoring Warning Signs in $20 Million Crypto Romance Scam, Lawsuit Alleges

A high-value crypto romance scam victim has filed a lawsuit against Citibank, claiming the bank overlooked multiple red flags that enabled scammers to siphon off $20 million through accounts held there. The case, brought forward by plaintiff Michael Zidell in a Manhattan federal court, alleges that Citibank failed in its legal and regulatory duties to detect and investigate suspicious transactions connected to an elaborate online fraud scheme.

Details of the Lawsuit

Filed on Tuesday, the complaint reveals that Zidell transferred over $20 million across numerous banking institutions during a scheme known as “pig butchering”—a scam in which fraudsters cultivate a fake romantic relationship with a target before persuading them to invest in fraudulent cryptocurrency ventures. Specifically, Zidell sent nearly $4 million via 12 transactions to Citibank accounts managed by an entity named Guju Inc.

According to the lawsuit, Citibank “turned a blind eye to its statutory duties and obligations” by processing these large transfers without initiating proper scrutiny. Zidell’s legal team argues that the size, frequency, and pattern of the transactions—particularly involving “large, round numbers” moving through accounts linked to trusts and various individuals—should have prompted the bank to investigate potential illicit activity. The complaint further accuses the bank of inadequate security protocols and lapses in monitoring suspicious financial behavior.

How the Scam Unfolded

Zidell traced the origin of the fraud to early 2023, when he was approached on Facebook by a woman identifying herself as “Carolyn Parker,” allegedly a business owner. What began as a friendly social interaction appeared to develop into a romantic relationship over the subsequent weeks. A month into their online connection, Parker encouraged Zidell to invest in non-fungible tokens (NFTs), claiming she had earned millions from such investments.

She directed Zidell to an NFT trading platform called OpenrarityPro, where he was instructed to make deposits into multiple bank accounts, purportedly to manage a high volume of customer funds. Over several months, Zidell completed 43 transfers totaling more than $20 million. By late April, however, the OpenrarityPro website suddenly went offline, along with access to his invested funds.

Industry Context and Wider Implications

Romance scams, especially those involving cryptocurrency investments, have become a lucrative and growing threat worldwide. Security firm Cyvers reported that romance scams led to losses exceeding $5.5 billion in 2023, affecting over 200,000 individuals. Similarly, Chainalysis estimated that crypto scams collectively amounted to $9.9 billion in losses in 2024, with projections potentially rising as more scam-linked wallets come to light.

In response to the escalating scale of such crimes, U.S. authorities recently seized $225 million related to pig butchering scams—the largest cryptocurrency seizure ever led by the Secret Service—reflecting intensified enforcement efforts against fraudulent crypto operations.

Potential Impact on Financial Institutions

The lawsuit against Citibank shines a spotlight on the responsibilities financial institutions carry in identifying and curbing illicit activity, especially as online scams grow increasingly sophisticated. Zidell’s suit contends that banks like Citibank must “exercise due care in monitoring suspicious transactions” and argues that failures to do so aid fraudsters in amplifying their schemes.

Citibank has been contacted for comment on the allegations but has yet to respond publicly.

Conclusion

This legal action underscores the significant challenges banks face amid the rise of crypto-related fraud rooted in deception and social engineering. It also raises critical questions about the effectiveness of current anti-fraud controls within major financial institutions and the potential legal liabilities when these controls fail. As the crypto ecosystem continues to evolve, stronger safeguards and vigilant oversight may be necessary to protect consumers and uphold trust in financial services.

Cointelegraph will continue monitoring developments in this case and the broader fight against crypto scams.