Citibank is being sued over a $20 million crypto romance scam

Citibank is being sued in federal court over a multimillion-dollar crypto romance scam, filed on Tuesday in the US District Court for the Southern District of New York. The complaint, made by Dallas-based plaintiff Michael Zidell, accuses the banking giant of aiding and abetting fraud after scammers allegedly stole $20 million from him through a “pig butchering” scheme.

According to court documents filed on June 24, Zidell was approached in January 2023 by a person named Carolyn Parker via Facebook. Parker claimed to be a businesswoman based in California, and made contact with the victim through phone calls and video chats on the WeChat messaging platform. 

Zidell said the relationship seemed friendly at the start, but he grew fond of Parker romantically over the following weeks.

Dozens of wire transfers and a $300 million Phantom balance

In February 2023, Parker supposedly told Zidell about her investments in non-fungible tokens (NFTs), insisting that she had made millions in profits through a trading platform called OpenrarityPro. 

Per Zidell, the scammer presented the website to him as “one of the largest NFT trading platforms in the world.” He propounded that the personal relationship and Parker’s “falsified” investment success was enough reason for him to invest in the NFT venture she recommended.

Zidell began making wire transfers to multiple bank accounts listed on OpenrarityPro. When he questioned the need to send funds to different accounts, he was told that due to high customer traffic, the platform relied on several banks to handle deposits. 

He accepted the explanation and, over several months, sent 43 wire transfers totaling over $20 million. Of that amount, nearly $4 million reportedly went to accounts held at Citibank.

Among the beneficiaries was a company named Guju Inc., which per court records, received 12 wire transfers through Citibank. The lawsuit blames Citibank for failing to detect numerous red flags, including unusually large and round-numbered transactions, and that these suspicious activities should have started a compliance review under the bank’s regulatory obligations.

By March 2023, Zidell believed his investments had grown exponentially. The court filings put in record that the OpenrarityPro website showed an account balance of over $300 million. 

When he attempted to withdraw some of his funds, the site demanded a “risk deposit” to unlock the assets. Zidell complied and sent the additional funds, but was then asked to pay more fees to process the withdrawal. No funds were ever returned.

Sudden disappearance of the trading platform

In late April 2023, the OpenrarityPro website was inaccessible. Zidell realized he had been defrauded and deemed the whole incident as a case of a “rug pull,” a term used in crypto to describe exit scams. 

Zidell then reported the case to the Dallas Police Department and the Federal Bureau of Investigation.

The lawsuit dictates Citibank is responsible for enabling the scam by failing to act on obvious “red flags.” It also states the bank should have investigated the accounts receiving Zidell’s transfers, given the pattern of large transactions to multiple trusts and individuals. 

The complaint also stated that Citibank breached its legal mandate to monitor suspicious activities and failed to implement adequate security protocols.

“Citibank failed to detect clearly suspicious transactions and failed to monitor the accounts even though large, round sums were transferred in and out of the accounts from trusts and other individuals in a suspicious manner,” Zidell’s attorneys wrote.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now