USA investor sues AT&T for $224 million over loss of cryptocurrency

Joanna Estrada
August 16, 2018

In a 69-page complaint filed with the U.S. District Court in Los Angeles, Terpin alleged that on January 7, 2018, the tokens were stolen from him through what he alleged was a "digital identity theft" of his cellphone account. In the beginning of January, when Terpin was stolen the tokens, most cryptocurrencies were trading close to their record highs.

When reached for comment, AT&T director for corporate communications Jim Greer told CoinDesk that "we dispute these allegations and look forward to presenting our case in court". The filing alleges that law enforcement had previously contacted AT&T about such frauds and yet the company took no precautions to prevent it. Lawyers claim that this fact is what moves the case from simple ignorance to "gross negligence". Fraud can occur when a provider is tricked into transferring a victim's phone number to a SIM card that is run by a hacker, who can use access to the phone number to reset passwords and log in to the victim's online accounts.

The lawsuit claims that Terpin's account has been hacked twice in seven months, saying "most troubling, AT&T has not improved its protections even though it knows from numerous incidents that some of its employees actively cooperate with hackers in SIM swap frauds by giving hackers direct access to customer information and by overriding AT&T's security procedures".

Terpin is best known as a co-founder of BitAngels, the first angel group for bitcoin investors. Today, Terpin is one of the Alphabit Fund's top advisers. That being the case, it's not terribly surprising that a prominent crypto investor who lost almost $24 million in stolen tokens is suing AT&T for a whopping $224 million.

Terpin is seeking the $24 million lost in the theft as compensatory damages as well as $200 million for punitive damages, which he says will serve as a lesson for the company to start taking security seriously.

Whatever the outcome of Terpin's court case, it illustrates the dangers of keeping large amounts of digital assets anywhere but in properly secured cold storage.

The precise details of the storage of Terpin's tokens are not now known.

The thieves accomplished this through a technique know and "SIM swapping". 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.

After all, a hacker would still have required Terpin's username and password to access a secure cryptocurrency wallet. Others simply shirk the responsibility of being the sole participant responsible for the safety of their digital wealth.

Other reports by Click Lancashire

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