Citibank Sued Over $20M Crypto Scam Oversight – Coincu

Michael Zidell has filed a lawsuit against Citibank in Manhattan federal court, accusing them of negligence after falling victim to a $20 million cryptocurrency scam that began earlier this year.

The case hands a critical look at institutional oversight in cryptocurrency fraud situations, emphasizing potential gaps in anti-money laundering protocols.

Citibank Faces $20M Lawsuit Over Alleged Scam Failures

Michael Zidell has initiated legal action against Citibank, asserting that the bank negligently allowed 43 transactions totaling $20 million to be processed by fraudulent accounts. The lawsuit claims Citibank neglected to address repeated suspicious alerts on these transactions. The scammers, under the alias “Carolyn Parker,” persuaded Zidell to invest in NFT ventures.

The lawsuit posits negligence by the bank, highlighting broader issues in anti-money laundering systems across financial institutions. Citibank allegedly ignored potential fraud warnings associated with large transactions, leading to massive financial losses for Zidell. The fraudsters purportedly urged Zidell into investing through Facebook, resulting in significant fund diversions.

Public reactions echo concerns over lessening investor trust in conventional financial entities. No official statements from Citibank or industry leaders like SEC or CFTC have been issued. Crypto Twitter and Reddit users urge bolstered banking oversight, spotlighting the ongoing need for vigilant regulatory and institutional compliance measures.

Historical Insights and Regulatory Challenges in Crypto Scams

Did you know? Pig butchering scams, which often involve elaborate social engineering tactics, have now ensnared victims since at least 2023, affecting traditional financial institutions like Citibank rather than crypto platforms themselves.

According to CoinMarketCap, Ethereum (ETH) trades at $2,482.59, exhibiting a 1.90% 24-hour increase while experiencing a 7-day decline of 1.50%. With a market cap of $299.69 billion, ETH commands 9.06% dominance in the crypto space, reinforcing its pivotal role. Data last updated at 06:19 UTC, June 26, 2025.

Insights from the Coincu research team suggest ongoing systemic vulnerabilities at the intersection of fiat and crypto systems. Calls for enhanced compliance measures in banking are prevalent. Historical patterns demonstrate that increased regulation and transparency, particularly in fiat-to-crypto domains, are essential to fend off fraudulent schemes.