A Massachusetts court ruled in favour of Santander Bank in a lawsuit where Lourenco Garcia lost over $750,000 in a cryptocurrency scam, stating the bank had no legal duty to stop the transactions. Garcia had transferred large sums believing they were legitimate investments, but the platforms were fraudulent. The ruling underscores the limitations of institutional protections against crypto fraud.
A Massachusetts appeals court ruled in favour of Santander Bank regarding a $751,000 crypto scam lawsuit. The court concluded that the bank bore no legal responsibility to intervene in Garcia’s transactions, which he authorised himself. This case illustrates the limitations of bank obligations amid rising cryptocurrency fraud.
Lourenco Garcia, the plaintiff, claimed he was deceived into transferring funds that he believed were for legitimate cryptocurrency investments. Between December 2021 and January 2022, he used his Santander accounts to conduct nine transactions, including two debit card purchases and seven wire transfers.
After the fact, Garcia realised that CoinEgg, the platform he used, was fraudulent. He subsequently filed a lawsuit consisting of breach of contract and consumer protection violations, arguing that Santander should have questioned the nature of his large transactions.
However, the appeals court upheld that while Santander’s customer agreement suggested potential action against suspected fraud, it did not impose a binding duty on the bank. It highlighted that transactions were authorised by Garcia without any raised concerns during processing.
The judges dismissed claims about the bank’s promotional language, pointing out that it did not create an obligation overriding the customer agreement terms. The judgement, albeit not a binding precedent, suggests banks may not be liable for losses from customer-initiated transactions where fraud is discovered post-transaction.
This ruling emphasises the need for consumers to perform due diligence in the cryptocurrency market. As digital finance evolves, the risks associated with unregulated platforms present challenges for investors. Garcia’s experience highlights the importance of verifying the legitimacy of investment opportunities before proceeding with large transactions.
