A California man, Ken Lim, has taken legal action against three prominent banks in Asia — Fubon Bank, Chung Hing Bank, and DBS Bank — for allegedly facilitating a $1 million cryptocurrency scam.
the lawsuitfiled in a California District Court on December 31, 2024, alleges that these banks failed to meet basic financial compliance requirements, including “know your customer” (KYC) and anti-money laundering (AML) checks, which could have prevented fraud.
Allegations of failures in compliance and financial oversight
The lawsuit traces the origins of the scam to June 2023, when Liem was contacted via LinkedIn about what appeared to be a legitimate cryptocurrency investment opportunity. Over the following months, Lim transferred large amounts of money to accounts at the three banks.
These funds were then transferred to third-party accounts, allegedly controlled by fraudsters. Liem’s legal team contends that basic compliance checks could have uncovered irregularities in these accounts, potentially flagging them as suspicious before significant damage was done.
Lim’s lawyers also argue that the banks in question neglected basic “know your customer” and “anti-money laundering” procedures, which are standard industry practices designed to prevent financial fraud.
They claim that even a basic review of the accounts would have revealed inconsistencies, including a lack of verifiable evidence supporting the legitimacy of the account holders’ business activities. The lawsuit states that the banks likely ignored obvious warning signs and, in doing so, played an indirect role in facilitating the fraud.
Additionally, the lawsuit accuses the banks of violating the US Bank Secrecy Act (BSA), which requires financial institutions to keep transaction records and report any suspicious activities to the Financial Crimes Enforcement Network (FinCEN).
Given that DBS Bank operates a branch in California and that transactions from Fubon and Chong Hing were routed through Liem’s Wells Fargo account, the lawsuit argues that these banks fall under US regulatory jurisdiction.
This connection forms the basis of the claim that banks are legally obligated to act on the suspicious nature of these transactions.
Legal implications and growing threat of cryptocurrency scams
The lawsuit also highlights the involvement of Hong Kong-based business entities — Richou Trade, FFQI Trade, Xibing and Weidel — that allegedly transferred Liem’s funds to third-party accounts. These entities are accused of being intermediaries in the fraud and acting as conduits for laundering stolen money.
Notably, this case highlights persistent vulnerabilities in the global financial system, particularly in the context of cross-border cryptocurrency fraud schemes.
It raises questions about the responsibilities of banking institutions in preventing such frauds and ensuring compliance with international financial regulations. If the lawsuit advances, it could set a precedent for holding banks liable for failing to report suspicious activity in cryptocurrency-related transactions.
Featured image created with DALL-E, chart from TradingView
Comments are closed, but trackbacks and pingbacks are open.