Michael Terpin, serial entrepreneur and pioneering cryptocurrency investor, today filed a $223.8 million lawsuit against AT&T on 16 counts of fraud, gross negligence, invasion of privacy, unauthorized disclosure of confidential customer records, violation of a consent decree, failure to supervise its employees and investigate their criminal background, and related charges in US District Court in Los Angeles.
The suit arises from the January 7, 2018, theft of more than 3 million cryptocurrency tokens worth at the time $23.8 million from Terpin by way of by a digital identity theft by an AT&T agent of Terpin’s cellphone account and transfer to an international criminal gang being pursued by the FBI and multiple other federal and state law enforcement agencies. AT&T’s gross negligence is compounded by the fact it promised Terpin unbreachable security on its end through a unique, purportedly unchangeable password following a smaller SIM swap theft in June, 2017.
The complaint then goes on to detail the July 2018 arrests of multiple SIM swap gang members, including Joel Ortiz, who was arrested on July 12 in Los Angeles on 28 counts and is suspected of stealing at least $5 million in cryptocurrency in similar hacks, including a $1.5 million SIM swap of an AT&T subscriber during New York Blockchain Week; and the July 18 arrest of Ricky Joseph Handschumacher in Florida for his role in a gang that stole at least $460,000 in bitcoin by hijacking SIM identities from AT&T customers, allegedly using information from one of its members in Michigan to effectively impersonate an AT&T customer service representative. Terpin alleges that this gang or one acting in similar fashion caused the SIM swap for the sole purpose of stealing cryptocurrency using an employee in an AT&T retail store in Connecticut on January 7, 2018.
“Mainstream adoption of cryptocurrency cannot take place as long as phone company employees are handing over critical unauthorized access to the heart of everyone’s digital lives,” said Terpin. “AT&T has a well-established track record of violating user privacy and security, endangering billions of dollars in digital assets, and must be called to account.” In an emailed response to Reuters, an AT&T spokesman said: “We dispute these allegations and look forward to presenting our case in court.”