Pig butchering victim sues banks for allowing scammers to open accounts

A California man has sued three banks for alleged “willful blindness” in allowing criminals to open accounts used to steal nearly $1 million from him in a cryptocurrency investment scam. 

According to his attorneys, the plaintiff, Ken Liem, was approached by a man on LinkedIn in June 2023 about opportunities to invest in crypto. Over the next six months, Liem made four wire transfers via Wells Fargo worth $986,000 to accounts in the names of three Hong Kong-registered entities. 

Liem realized his purported investments were a sham when one of his cryptocurrency accounts was “frozen” for money laundering purposes. He was also asked to make a supposed tax payment to the Internal Revenue Service in order to withdraw his money, a typical tactic by scammers to wring out as much profit as they can from a victim before vanishing with the funds. 

The three banks, according to the lawsuit, were of no help afterward.

Such pig-butchering scams are estimated to have resulted in victims losing tens of billions of dollars as industrial-scale operations run by organized crime groups have ramped up throughout Southeast Asia.

While such lawsuits against financial institutions from scam victims are rare, they are not without precedent. In January 2024, two elderly victims who lost a combined $2.22 million in an IRS impersonation scam filed separate suits against JP Morgan Chase for allowing transfers to overseas banks to go ahead despite the size of the transactions and the age and typical activities of the account holders.

‘Know Your Customer’ rules

Liem notified the banks where he transferred the money in August 2024 but according to his lawyers they “either disclaimed any responsibility for their actions or did not respond to Plaintiff.” 

In his suit filed in the Central District of California on December 31, Liem accuses the financial institutions — Hong Kong-based Chong Hing Bank Limited and Fubon Bank Limited, as well as Singapore-based DBS Bank, which has a Los Angeles branch — of failing to conduct Know Your Customer anti-money laundering checks as required by the Bank Secrecy Act. 

The banks allegedly failed to verify documents proving the identity of the owners of the accounts, nor did they inquire about the “nature of the businesses’ activities.” 

“Banking Defendants appear to have drawn a blind-eye toward illicit proceeds moving from the United States to a plethora of Asian entities whose accounts they custodied and handled, and thus assisted in the extraction of hundreds of thousands of dollars, if not millions, that funded pig-butchering scams,” the lawsuit alleges. 

Interpol recently urged people to stop using the term pig butchering — whose Chinese equivalent sha zhu pan was coined by cybercriminals —  because it “dehumanizes and shames victims” and suggested saying “romance baiting” instead. 

Who should pay?

As losses to cyber scams have mounted, regulators, financial institutions and technology platforms have disagreed about who should be held responsible. In the United Kingdom, new rules went into effect in October requiring banks to refund fraud victims up to £85,000 ($106,426) within five days. That amount was slashed from a maximum of £415,000 (about $519,600)  after complaints from the financial industry.  

In Australia, meanwhile, a law is being considered that would impose fines on telecom companies, social media platforms and banks for insufficiently preventing scams.

In December, the U.S. Consumer Financial Protection Bureau sued Bank of America, Well Fargo and JP Morgan Chase for allegedly failing to prevent fraud on the Zelle payment platform. The agency claims that since its launch in 2017, victims have lost $870 million to fraud through Zelle.