California Man Sues Three Asia-Based Banks Over $1M Crypto-Fraud Scam

A California resident, Ken Liem, has filed a lawsuit against three Asia-based banks, accusing them of negligence in preventing a $1 million cryptocurrency scam known as a “pig butchering” scheme. The suit, filed in a California district court on December 31, 2024, alleges that the banks failed to perform basic checks that could have stopped the scammers from opening accounts.

How the Scam Unfolded

Liem claims he was approached on LinkedIn in June 2023 with a fraudulent cryptocurrency investment opportunity. Over several months, he transferred nearly $1 million to accounts at Hong Kong-based Fubon Bank and Chong Hing Bank, as well as Singapore’s DBS Bank, under the impression that the funds were being invested on his behalf.

Instead, the funds were allegedly diverted to third-party accounts controlled by the scammers.

Allegations Against the Banks

Liem’s attorneys argue that the banks failed to implement proper Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. The suit claims that even minimal scrutiny of the account holders’ credentials would have raised red flags, preventing them from opening accounts.

The lawsuit accuses the banks of knowingly ignoring suspicious transactions, stating:

“Banking Defendants appear to have drawn a blind-eye toward illicit proceeds moving from the United States to a plethora of Asian entities whose accounts they custodied and handled.”

Additionally, the banks are accused of violating the U.S. Bank Secrecy Act, which mandates financial institutions to maintain detailed transaction records and report suspicious activities to U.S. authorities.

Named Entities and Damages

The suit also names Hong Kong-based business entities Richou Trade, FFQI Trade, Xibing, and Weidel, alleging they:

Diverted Liem’s funds to third-party accounts unlawfully.
Misrepresented the intended use of funds for cryptocurrency investments.

Liem is seeking a jury trial and at least $3 million in damages, claiming the banks facilitated the fraudulent extraction of funds by failing to uphold compliance standards.

Broader Implications

This case highlights the growing concern over crypto-related scams and the role financial institutions play in preventing them. Legal experts note that banks could face increased scrutiny for failing to prevent fraudulent activities, particularly when international transactions are involved.

What Is a “Pig Butchering” Scam?

“Pig butchering” scams involve prolonged grooming of victims to gain their trust before convincing them to invest in fraudulent schemes. The name refers to the practice of “fattening up” the victim (like a pig) with promises of high returns before stealing their funds.

Next Steps

As of now, the accused banks—Fubon Bank, Chong Hing Bank, and DBS Bank—have not commented on the lawsuit. The Hong Kong-based entities involved could not be reached for comment.

This lawsuit could set a precedent for how financial institutions are held accountable for enabling fraud in the rapidly evolving world of cryptocurrency. Stay tuned for developments as the case unfolds.