A lawsuit filed by the co-founder of crypto investment group BitAngels against telecommunications giant AT&T for failure to stop a SIM swap is moving to trial.
This suit was first filed by Michael Terpin in August 2018 in the Los Angeles U.S. District Court. Terpin claims that AT&T cooperated with scammers on two separate occasions, allowing them access to Terpin’s SIM card without conducting any steps of due diligence to verify that their identity. As a result, Terpin claims, hackers were able to steal some $24 million worth of crypto assets from his wallets.
AT&T publicly stated its innocence in the matter, claiming that the company looks forward to a chance to prove itself in a court of law. Terpin, for his part, has sought $200 million in punitive damages on top of the compensation for the stolen crypto assets.
The implications for the result of this case can establish an important precedent in the field of consumer protection law. With both parties refusing to settle out of court, AT&T moved next to have the case dismissed before it could go to trial. On July 22, 2019, Terpin’s legal team publicly announced that federal judge Otis Wright II blocked AT&T’s attempt.
Wright stated in his verdict that “Mr. Terpin has sufficiently alleged that AT&T permitted unauthorized access to his proprietary information, specifically his account information and private communications,” according to the announcement. Wright also stated that Terpin’s aim is “to declare AT&T’s wireless customer agreement as unconscionable, void against public policy and unenforceable in its entirety.”
For all the ways that the trustless nature of distributed ledger technology has made bitcoin a secure store of value, the crypto space has a long history of major hacks. The largest opportunity for hackers and scammers to access their targets’ wallets is through the exploitation of backdoor protocols, faking the rightful owner’s credentials to bypass security protocols.
AT&T simply allowing these hackers access to Terpin’s SIM card is a textbook example of diligent bitcoin users being defrauded due to circumstances outside of their control. A successful verdict on Terpin’s behalf could force cell phone companies such as AT&T to provide more security to their users worldwide.
Terpin has already established a track record of success in this sort of case, as he won $75 million in damages in a lawsuit against the actual perpetrator of the hack in May 2019.