A California resident has filed a lawsuit against three Asia-based banks, accusing them of negligence that allegedly enabled cryptocurrency scammers to defraud him of nearly $1 million.
On December 31, 2024, the lawsuit was filed in a California district court, explaining how Ken Liem fell victim to a “pig butchering” hoax after being contacted on LinkedIn in the middle of 2023 about a phoney investment opportunity.
What is the Case About?
According to Liem’s attorneys, the scam began in June 2023 when the plaintiff was persuaded to invest in cryptocurrency through scammers posing as legitimate investors.
Over several months, Liem transferred significant sums of money to accounts at Hong Kong’s Fubon Bank Limited, Chong Hing Bank Limited, and Singapore’s DBS Bank Limited. These funds were subsequently funnelled into third-party accounts, leaving the victim with significant losses.
Banks Accused of Negligence
The lawsuit alleges that the three banks failed to conduct adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, critical procedures designed to prevent illicit activities.
Attorneys for Liem argue that basic scrutiny of the account holders’ profiles and transactions would have raised red flags about the legitimacy of their activities.
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The legal team further claims the banks ignored the “high probability” that the accounts were being used for fraud. They state that even a cursory review would have revealed insufficient evidence of legitimate business operations associated with these accounts.
“Banking Defendants appear to have turned a blind eye to illicit proceeds moving from the United States to a plethora of Asian entities whose accounts they custodied and handled,” Liem’s attorneys asserted in the court filing. They also accused the banks of indirectly aiding the scammers in extracting hundreds of thousands of dollars from their client and potentially other victims.
The Rise of Pig Butchering Scams
Pig butchering scams, named for the way scammers “fatten up” victims with trust before defrauding them, have become increasingly sophisticated.
Fraudsters often contact victims through professional platforms like LinkedIn, posing as financial experts or investors. In Liem’s case, the scammers leveraged these tactics to gain his trust and convince him to part with substantial sums of money.
Crypto Scam Losses Decline in Late 2024
While individual cases like Liem’s highlight the ongoing risks in the crypto space, the broader trend in 2024 was positive. Reports from blockchain security firms CertiK and PeckShield show that losses from cryptocurrency-related scams, hacks, and exploits significantly declined in the final months of the year.
December 2024 saw the least amount of damage from such incidents compared to previous months, signalling improved blockchain security practices.
Experts attribute the decline to advancements in security protocols, increased awareness among users, and stricter regulatory measures targeting fraudulent activities.
However, the lawsuit filed by Liem underscores that gaps in institutional diligence, particularly among banks and financial institutions, remain a weak point.
Implications for Banks and Victims
The outcome of this lawsuit could set a precedent for holding banks accountable for their role in facilitating fraud. If the court rules in favour of Liem, it may push financial institutions to implement stricter measures and more rigorous monitoring of account activities to prevent future scams.
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