Citibank Allegedly Ignored $20M Crypto Scam Warnings

Michael Zidell filed a federal lawsuit in Manhattan against Citibank, claiming they overlooked signs of a $20 million cryptocurrency scam involving fake NFT investments, orchestrated by scammers with accounts at the bank.

The lawsuit highlights potential deficiencies in banks’ due diligence processes, raising concerns about institutional responsibility in preventing crypto-related scams, though market reactions remain muted due to the specific nature of the case.

Citibank Faces $20M Scam Lawsuit

Michael Zidell alleges that Citibank failed its obligations after he transferred $20 million to scammers posing as crypto partners. He claims the scam utilized fake personas and involved NFT investments.

Scammers operated through Citibank accounts, revealing potential oversight issues. Zidell’s lawsuit points to potential lack of scrutiny, as nearly $4 million was channeled through these accounts without intervention.

Michael Zidell, Plaintiff/Victim, said: “I trusted Citibank with my $20 million, and I expected them to protect me from scams, but they ignored the red flags that led to my loss.”

Crypto Romance Scams Exploit NFTs

The incident underscores the growing trend of romance scams exploiting cryptocurrencies, particularly NFTs. While Citibank and industry leaders remain silent, the community debates heightened vigilance in identifying suspicious activities.

Potential regulatory responses could focus on enhanced monitoring of crypto transactions within banks. Historical data from the FBI highlights billions in losses, stressing the urgency for more robust preventive measures.

FBI Reports $5.6B Crypto Scam Losses

The event mirrors previous crypto scams involving fictitious investments, with the FBI noting $5.6 billion losses in 2023. Such scams often pivot around BTC, ETH, and NFTs.

Kanalcoin experts suggest that banks may need to implement more rigorous fraud detection systems. They emphasize the increasing complexity of scams, leveraging crypto’s pseudonymous nature to evade detection.