A Massachusetts appeals court has dismissed a rare case where Lourenco Garcia attempted to hold Santander Bank liable for a $751,000 loss in a cryptocurrency investment scam.
The dismissal of the case comes at a time when crypto scams have seen a rise, especially with the rise in userbase.
What Was The Case About?
A customer named Lourenco Garcia tried to hold Santander Bank accountable for a $751,000 loss he suffered as a result of a cryptocurrency scam.
According to Garcia, the bank had an obligation to identify and halt the suspicious transactions, thus it should have stepped in to stop the wire payments he made to scammers.
Even though the transactions seem odd or hazardous, the court supported a lower court’s ruling that banks are not normally required to keep an eye on or inquire about their customers’ payment instructions.
Also Read: Hawaii Police Warn Residents After Crypto Scammers Wipe Out $3 Million From Victims Life Savings
How Was The Scam Conducted?
Scammers posing as investment gurus had deceived Garcia into willingly authorizing the transfers. The bank only carried out the transactions as directed, the court stressed, and there was no legal justification for assigning Santander responsibility for the crime.
This ruling upholds established legal precedents that give consumers, not financial institutions, the burden of doing due diligence in these situations.
Lourenco Garcia transferred funds to the Metropolitan Commercial Bank of New York from his Santander Bank accounts seven times and completed two debit card transactions between December 2021 and January 2022.
These $751,000 in funds were used to buy cryptocurrencies on websites like CoinEgg and Crypto.com. Garcia eventually learned that CoinEgg was a scam, even though he thought he was investing through a trustworthy trading platform.
Under the pretense of a lucrative cryptocurrency investment opportunity, the con artists had deceived him into sending money. The money was gone by the time Garcia discovered the truth, and he attempted to hold Santander accountable, a claim the court finally dismissed.
Crypto Related Scams See A Steady Rise in 2024
Scams involving cryptocurrency increased in 2024, with scammers using digital assets to defraud investors out of more than $10 billion. The growth of “pig butchering” scams, which are persistent frauds in which victims are tricked into investing in phony cryptocurrency platforms, was a major factor in this increase.
According to Chainalysis, the usage of generative AI and structured fraud networks is to blame for the 40% increase in revenue from these frauds over the previous year.
With a 210% increase in deposits, romance scams also saw a noticeable uptick, suggesting a wider victim pool. Developing victims’ trust before persuading them to participate in fraudulent cryptocurrency schemes is a common tactic used in these scams.
Furthermore, fraud losses using Bitcoin ATMs increased almost tenfold between 2020 and 2023, reaching $65 million in the first half of 2024, indicating an increase in the usage of these machines for frauds.
The necessity for investors to exercise greater caution is highlighted by the growing sophistication of these scams, which are supported by AI and social engineering techniques.
The public is still being cautioned by authorities and financial professionals about unsolicited investment possibilities and the significance of confirming the legitimacy of cryptocurrency platforms prior to making an investment.