US Court Continues with $1.8M Crypto Lawsuit against Telecom Giant AT&T

Two-time Emmy winner Seth Shapiro filed the lawsuit in December 2019 after a SIM-swap attack saw him lose worth $1.8 million of crypto.

A US federal judge has allowed a lawsuit against AT&T concerning the theft of $1.8 million crypto to continue, rejecting the company’s bid to have the case dismissed.

In his orders, California District Judge Consuelo B. Marshall dismissed AT&T’s bid, allowing the lawsuit — alleging negligence on the part of the American conglomerate — will now go ahead. 

The plaintiff Seth Shapiro alleges that the company failed to prevent a SIM-swap attack, claiming negligence on the part of the company resulted in the theft in their second attack.

Shapiro filed his lawsuit in the California District Court in October 2019, stating that an AT&T employee had allowed hackers to access his mobile phone number and as a result, his personal data was compromised.

According to court documents, the first time Shapiro alerted AT&T of a possible attack on his phone number was in May, 2018. He had approached an employee of the company, who despite noting that there was evidence of SIM swap activity on the plaintiff’s phone, assured him that such an activity would not reoccur “without his authorization.”

The plaintiff thus claimed that “AT&T [had] failed to implement sufficient data security systems and procedures.” He also claimed  that the company stood by as employees exploited their access to his account to engage in malicious attacks aimed to “extort and threaten him in exchange for money.”

The two-time Emmy winner lost his crypto assets when the attacker successfully swapped Shapiro’s phone number. The hacker then used it on a separate cell phone and gained access to highly sensitive data, which they used to access his crypto accounts on major digital asset exchanges like Coinbase, KuCoin, Bittrex, Huobi, HitBTC and Bitfinex.

In December 2019, AT&T filed a motion seeking the court’s order to dismiss the case. The company also filed support for the motion in January, alleging that Shapiro’s $1.8 million crypto theft lawsuit failed to show the company was responsible for the losses.

In its filing, AT&T claimed that the plaintiff’s allegations were fundamentally flawed as he “jumps” from stating that attackers accessed his SIM number to claiming it resulted in him losing crypto worth millions of dollars.

Judge Consuelo B. Marshall’s orders allow Shapiro up to until May 29, by which point he should have filed an amended complaint.

This is not the only SIM-swap related lawsuit against AT&T. An early investor in crypto, Michael Terpin, sued the telecom giant in 2018 for an attack by a then 15-year-old hacker who allegedly stole $23.8 million from his accounts. Terpin sought $200 in compensation, but last month sued 18-year-old Ellis Pinsky for $71.4 million in damages after the initial theft.

Pinsky, who returned $2 million of the stolen fund, is suspected of having stashed over $100 million in offshore accounts.