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Michael Zidell, a victim of a $20 million crypto romance scam, has expanded his legal battle by suing East West Bank and Cathay Bank for allegedly ignoring critical red flags.
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Following his initial lawsuit against Citibank, Zidell accuses these banks of negligence and complicity in facilitating fraudulent transfers linked to a sophisticated NFT investment scam.
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According to COINOTAG, Zidell’s complaint highlights the banks’ failure to monitor suspicious transactions despite clear indicators of fraud, emphasizing their role as potential enablers of the scam.
Crypto romance scam victim sues East West and Cathay Banks for negligence in $20M NFT fraud, spotlighting critical failures in transaction monitoring and elder abuse allegations.
Legal Action Targets East West and Cathay Banks Over NFT Fraud
Michael Zidell’s recent lawsuits against East West Bank and Cathay Bank mark a significant escalation in his pursuit of accountability for a crypto romance scam that resulted in losses exceeding $20 million. The lawsuits, filed in a California federal court, assert that both banks failed to fulfill their statutory duties by allowing suspicious transfers to proceed unchecked. Zidell alleges that these institutions “turned a blind eye” to numerous red flags, including unusually large and repetitive wire transfers totaling nearly $17 million combined. This legal strategy underscores the growing scrutiny of financial institutions’ roles in preventing crypto-related fraud, especially as non-fungible token (NFT) scams become increasingly prevalent.
Details of the Romance Scam and NFT Investment Scheme
The fraud reportedly began when Zidell was contacted by an individual named “Carolyn Parker” via Facebook, who cultivated a romantic relationship before introducing him to a fraudulent NFT investment platform. Over several months, Zidell transferred funds to multiple bank accounts across East West Bank and Cathay Bank, following Parker’s advice that the platform required processing through various banks due to high customer volume. The platform abruptly disappeared by April 2023, leaving Zidell with substantial financial losses. This case exemplifies the intersection of social engineering and crypto fraud, where personal relationships are exploited to facilitate large-scale financial deception.
Allegations of Bank Negligence and Complicity in Fraudulent Activities
Zidell’s complaints emphasize the banks’ alleged negligence in monitoring and reporting suspicious activities. The lawsuits claim that East West Bank and Cathay Bank materially aided the scam by providing essential banking services, including account management and wire transfers, without adequate due diligence. The suit argues that the banks failed to investigate the “large, round numbers” and repetitive transactions that should have triggered internal compliance protocols. By labeling the banks as “aiders and abettors” of securities fraud, the lawsuits highlight the critical responsibility of financial institutions to detect and prevent illicit activities within the rapidly evolving crypto ecosystem.
Inclusion of Elder Abuse Claims Amplifies Legal Stakes
Distinct from the earlier Citibank case, Zidell’s lawsuits against East West and Cathay Banks also include allegations of aiding and abetting elder abuse. While Zidell’s age is not explicitly stated, California law defines elder abuse protections for individuals aged 65 and older. This addition raises the legal stakes by framing the banks’ alleged failures as not only financial negligence but also violations of protections designed to safeguard vulnerable populations. The pursuit of compensatory damages, legal fees, and interest at trial reflects the comprehensive approach Zidell is taking to seek restitution and accountability.
Implications for Banks and the Crypto Industry
This case serves as a cautionary tale for banks operating within the crypto space, highlighting the necessity for robust anti-fraud measures and enhanced transaction monitoring. As crypto scams diversify and increase in sophistication, financial institutions face mounting pressure to implement advanced compliance frameworks that can identify and halt suspicious activities promptly. Zidell’s lawsuits may set a precedent for holding banks accountable not only for negligence but also for enabling fraud through insufficient oversight, potentially influencing regulatory expectations and industry standards.
Call to Action for Enhanced Due Diligence in Crypto Transactions
Financial institutions are urged to strengthen their due diligence processes, particularly concerning large and repetitive transfers linked to emerging crypto assets like NFTs. This includes investing in advanced analytics, employee training, and cross-institutional cooperation to detect patterns indicative of fraud. For consumers, the case underscores the importance of vigilance and skepticism when engaging with unsolicited investment opportunities, especially those originating from social media or personal relationships.
Conclusion
Michael Zidell’s expanded legal actions against East West Bank and Cathay Bank spotlight critical vulnerabilities in the banking sector’s handling of crypto-related transactions. By alleging negligence, complicity in securities fraud, and elder abuse facilitation, these lawsuits underscore the urgent need for enhanced institutional safeguards. As the crypto landscape evolves, this case may influence both regulatory scrutiny and banking practices, emphasizing the shared responsibility to protect consumers from increasingly sophisticated scams.
