Federal Appeals Court Revives AT&T $24M Crypto Hack Lawsuit

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As a seasoned crypto investor who has witnessed my fair share of ups and downs in this dynamic market, I can’t help but feel a sense of vindication upon hearing the news that the court has reinstated Michael Terpin’s lawsuit against AT&T. The fact that a telecom giant like AT&T could allow such a breach to occur is disheartening, but it serves as a stark reminder for all of us to remain vigilant in protecting our digital assets.

The Ninth Circuit Court of Appeals has reinstated a significant point in the legal case filed by cryptocurrency investor Michael Terpin against AT&T. Terpin alleges that AT&T negligently allowed hackers to seize control of his mobile device, ultimately leading to a $24 million loss of cryptocurrency assets.

With this ruling, a portion of Terpin’s original lawsuit that had been dismissed by the court is once again valid. This means Terpin can continue to pursue his allegations based on the Federal Communications Act (FCA) in court.

Court Revives AT&T $24M Crypto Hack Lawsuit

Based on a Bloomberg report, the scope of allegations against AT&T has been reduced. However, an appellate panel reversed the dismissal of the majority of fraud and negligence charges. The only claim they reinstated was Michael Terpin’s Section 222 under the Federal Communications Act (FCA), which requires telecommunications carriers to safeguard customer confidential information related to their network.

According to the court, there’s evidence suggesting that if AT&T had protected Terpin’s mobile account effectively, it is possible that hackers wouldn’t have managed to steal his cryptocurrency. In other words, a reasonable argument can be made that AT&T’s failure to secure Terpin’s account may have exposed him to these hackers.

In their ruling, it was noted that by executing a fake SIM card swap, the cybercriminals obtained Terpin’s phone number. Having this number gave them entry to his private information. This access enabled the hackers to modify passwords and pilfer $24 million in cryptocurrency from Terpin’s digital wallets.

Details of the 2018 SIM Swap Attack

In January 2018, an unverified cyber attack occurred. As stated in the lawsuit filed by Terpin, a team of hackers, with Ellis Pinsky as their leader (who was only 15 years old at the time), reportedly persuaded an AT&T employee to switch Terpin’s phone number to a SIM card controlled by the hackers. Despite the additional security measures implemented in 2017 following a prior breach, which included a 6-digit passcode, the hackers managed to circumvent these protective measures.

After obtaining Michael Terpin’s phone number, hackers managed to reset his account passwords using the phone and transferred approximately $24 million in cryptocurrencies to themselves. Pinsky chose to return the portion of the stolen funds he received, but another hacker, Nicholas Truglia, was ordered by a Los Angeles court to compensate Terpin for damages totaling $75.8 million.

Simultaneously, in July, AT&T encountered a situation where it was allegedly breached by hackers who are said to have stolen customer data including call logs and text messages. According to reports, AT&T reportedly paid $400,000 in Bitcoin to these hackers to delete the information. Although AT&T has neither confirmed nor denied this payment, data from blockchain analysis companies such as Chainalysis suggest transactions linked to the ransom.

What Next After Reinstatement?

Restoring Terpin’s case under the Federal Communications Act (FCA) means his lawsuit can progress towards a trial, where he is seeking $24 million in compensation, pre-judgment interest, and legal fees. As stated by Terpin’s attorney Pierce O’Donnell, this appellate court decision is advantageous for consumers since it allows them to take telecom companies to court over SIM swap fraud. This ruling could potentially inspire other courts to adopt similar practices, empowering consumers further.

As a crypto investor, I’ve recently received an apology from AT&T regarding the theft of my digital assets, but they also emphasized that most of the accusations brought against them were dismissed in court. Despite this, they remain confident in their ability to address the remaining allegations concerning FCA.

The rise in cryptocurrency hacking incidents has garnered attention from blockchain experts such as ZachXBT, who recently uncovered another significant scam in the UK. In his investigation, ZachXBT found that over 250 users were deceived by using false Bybit demo accounts and collectively lost approximately $650,000.

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2024-10-01 03:18