
A California resident, Ken Liem, has filed a lawsuit against three Asia-based banks, accusing them of neglecting their due diligence obligations and failing to block fraudulent cryptocurrency transactions that resulted in him losing nearly $1 million. The suit, filed on December 31, 2024, in a California district court, draws attention to the rising concerns of “pig butchering” crypto scams, a type of crypto-fraud that is becoming increasingly pervasive.
The Rise of Pig Butchering Scams
Pig butchering scams are a particularly insidious form of investment fraud that has targeted individuals worldwide. The name “pig butchering” is derived from the analogy of fattening up a pig before slaughter, where scammers groom victims over time, earning their trust, and then deceive them into making substantial investments. These scams typically involve the promise of high returns on cryptocurrency investments, only for the funds to be stolen once they are transferred to the fraudsters’ accounts.
In the case of Ken Liem, the scammers initially made contact with him through LinkedIn in June 2023, presenting themselves as cryptocurrency investment professionals. Over the next several months, they convinced Liem to transfer funds under the pretense that these would be used for lucrative cryptocurrency investments. As with many victims of such scams, Liem was led to believe that his funds would grow, but in reality, they were funneled into fraudulent accounts.
Allegations Against the Banks
Liem’s legal team argues that the banks involved in the transactions—Hong Kong-based Fubon Bank and Chong Hing Bank, and Singapore-based DBS Bank—failed to perform adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which could have flagged the fraudulent activity. KYC and AML regulations are designed to prevent financial institutions from being used as conduits for illicit activities such as money laundering and fraud. The lawsuit asserts that if the banks had conducted even basic background checks on the account holders, they would have found “a complete lack of credible evidence that their business activities were lawful or legitimate.”
One of the central claims in the lawsuit is that the banks were “willfully blind” to the transactions flowing through their accounts, particularly as large sums of money were transferred from the United States to Asia, often with no clear or legitimate purpose. The funds were sent to third-party accounts, further complicating the traceability of the money and adding to the difficulty of tracking the perpetrators.
Legal Arguments and Violations
The lawsuit also accuses the three banks of violating the U.S. Bank Secrecy Act, a law that mandates financial institutions to maintain detailed records of financial transactions and report suspicious activities to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). According to Liem’s attorneys, the banks’ failure to adhere to this act highlights their negligence in protecting their customers from fraud.
As part of their argument, the plaintiffs point out that DBS Bank operates a branch in California, and both Fubon Bank and Chong Hing Bank processed Liem’s transactions through his U.S. bank account at Wells Fargo. This makes the banks subject to U.S. regulations, including the Bank Secrecy Act, even though the banks are based overseas.
The lawsuit names four Hong Kong-based business entities—Richou Trade, FFQI Trade, Xibing, and Weidel—that allegedly opened the fraudulent accounts. These entities are accused of falsely representing that Liem’s funds would be used for cryptocurrency investments, only to divert them into third-party accounts once they had been deposited.
Seeking Justice and Damages
Liem’s legal team is seeking a jury trial, demanding a minimum of $3 million in damages. This figure represents the lost funds, as well as the emotional and financial distress caused by the scam. The lawsuit emphasizes that had the banks conducted proper checks and adhered to regulatory requirements, the fraud could have been prevented, sparing Liem from the devastating financial loss.
While Fubon Bank, Chong Hing Bank, and DBS Bank have not yet commented on the lawsuit, the case highlights a broader issue in the global banking sector: the failure of some financial institutions to properly vet account holders and monitor suspicious transactions. This case, like many others, underscores the need for stronger regulatory oversight of international financial transactions, especially as they pertain to emerging technologies like cryptocurrencies.
The Broader Implications for Cryptocurrency and Banking
The rise of cryptocurrency has brought with it new challenges for regulators and financial institutions, especially when it comes to preventing fraud. While cryptocurrencies offer decentralized, borderless transactions that can be faster and more efficient than traditional banking methods, they also present a fertile ground for illicit activities. Scammers can easily exploit the lack of regulatory oversight in some regions, using crypto as a means of transferring stolen funds across borders without detection.
The lawsuit against the banks involved in Liem’s case may have far-reaching implications for how financial institutions handle cryptocurrency transactions. If Liem’s legal team succeeds in proving that the banks were negligent in their duties, it could lead to stricter regulatory frameworks, both domestically and internationally, aimed at protecting consumers from similar scams in the future.
Moreover, the case may spark a broader conversation about the responsibilities of financial institutions in safeguarding their customers from fraud, particularly when it comes to digital assets. With the increasing prevalence of crypto-based scams, it is clear that both the public and private sectors must work together to create stronger defenses against these types of crimes.
Conclusion
Ken Liem’s lawsuit is more than just an attempt to recover lost funds—it is a critical step in addressing the growing problem of cryptocurrency fraud. As scams like the “pig butchering” scheme continue to proliferate, it is essential for both individuals and financial institutions to remain vigilant. The case serves as a reminder of the importance of conducting thorough due diligence, following regulatory guidelines, and holding institutions accountable for their role in facilitating or ignoring fraudulent activities.
As the legal proceedings unfold, the outcome of this lawsuit could have significant consequences not only for the banks involved but also for the broader financial and cryptocurrency industries. It will be interesting to see how the court responds to these allegations and whether this case will set a precedent for future litigation in the crypto-fraud space.