US Investor Sues Telecom Company AT&T for Loss in Cryptocurrency Theft

On August 15, 2018, entrepreneur and cryptocurrency investor Michale Terpin filed a lawsuit worth $224 million against telecommunications company AT&T and accused the company of “negligence and fraud” regarding the theft of cryptocurrencies from his personal account.

A new Kind of Cryptocurrency Scams

The 69-page complaint, filed with the U.S. District Court in Los Angeles, the businessman has alleged that cryptocurrencies were stolen through the means of “digital identity theft” of his account registered with the cell phone company back in January. The businessman further stated that he was the victim of two hacks in the space of seven months.

Elaborating on the first hack, theTerpin said that an imposter was able to get his phone number from an “insider who was cooperating with the hacker” and that an AT&T employee allowed access to the accused without any document. He said, “What AT&T did was like a hotel giving a thief with a fake ID a room key and a key to the room safe to steal jewelry in the safe from the rightful owner.”

A part of 69-page complain reads:

By obtaining control over Mr. Terpin’s phone, the hackers diverted Mr. Terpin’s personal information, including telephone calls and text messages, to get access to accounts that use telephone numbers as a means of verification or authentication.

After the hackers took charge of Mr. Terpin’s telephone number, the hackers accessed Mr. Terpin’s telephone to divert texts and telephone calls to gain access to Mr. Terpin’s cryptocurrency accounts. The hackers also used the phone to hijack Mr. Terpin’s Skype account to impersonate him. By that means, the hackers convinced a client of Mr. Terpin to send them cryptocurrency and diverted a payment due to Mr. Terpin to themselves. AT&T finally cut off access by the hackers to Mr. Terpin’s telephone number on June 11, 2017, but only after the hackers had stolen substantial funds from Mr. Terpin.

The Irony of the case is that everything has happened five months before the $24 million theft. Following the initial data breach, the company offered him the highest level of security.

Terpin claims that, at the time of the theft, the cryptocurrencies stolen were worth $23.8 million and he is seeking $200 million in punitive damages. He added that, after the robbery, his cell phone account was “transferred to an international criminal gang.”

The complaint stated that the theft of the cryptocurrencies had taken place through something known as SIM swap fraud. SIM stands for “subscriber identification module” and is usually used to authenticate the identity of the person using the service provider.

In an email response to Reuters, a representative from the telecom company said, “We dispute these allegations and look forward to presenting our case in court.”

The entrepreneur is the co-founder of a group for bitcoin investors called BitAngels founded in 2013. At the time of the report, it has not been mentioned which cryptocurrencies were stolen.

The At&T verdict is not the first, lawsuits correlated to digital currencies have been lodged against exchanges and their alleged bungle of data breaches. Since the odd theft of more than $500 million in NEM coins from hacked Japanese crypto exchange Coincheck last January, many class action lawsuits have been filed by customers and investors pointing the finger at other exchanges over its decision to freeze the withdrawals following the hack.