AT&T loses claim to dismiss $1.8 million crypto theft lawsuit

Consuelo Marshall, United States District Judge, has dismissed AT&T’s motion to dismiss a lawsuit that alleges the company was negligent in failing to prevent the theft of $1.8 million in cryptomoney from investor Seth Shapiro.

In the judge’s order allowing the lawsuit to proceed, Shapiro’s claims of negligence and negligent oversight, claims brought under the Computer Fraud and Abuse Act, and the application for punitive damages, were left intact.

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SIM Exchange Attack
Shapiro, an Emmy Award-winning media technology consultant who has previously worked for companies such as Disney and Showtime, filed suit against AT&T in December 2019, alleging the company’s security breaches resulted in multiple attacks.

SIM exchange attacks require the participation of employees of a telecommunications company. The telecommunications employee deliberately or inadvertently reassigns the victim’s account to a SIM card controlled by a malicious actor, who in turn can access information or accounts belonging to the target.

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The court order states that Shapiro suffered its first SIM exchange attack during May 2018, in which an AT&T employee „observed SIM exchange activity on [the plaintiff’s] account and assured [the plaintiff] that his SIM card would not be exchanged again without his authorization.

„AT&T failed to implement sufficient data security systems and procedures and failed to monitor its own personnel; instead, it stood by while its employees used their position in the company to obtain unauthorized access to Mr. Shapiro’s account in order to steal, extort and threaten Mr. Shapiro in exchange for money,“ according to Shapiro’s complaint.

Shapiro has until May 29 to file an amended complaint in response to the order.

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15-year-old hacker steals $24 million in a SIM exchange attack
AT&T also faces an ongoing lawsuit by pioneering crypto investor Michael Terpin, who is seeking compensation of more than $200 million for a $23.8 million SIM swap attack that took place during January 2018.

Last month, the case took a surprising turn when Terpin filed a new lawsuit against the alleged attacker, who has just turned 18.

At the time of the attack, the defendant, Ellis Pinsky, was only 15 years old and returned $2 million of the funds. Now that he is of age, Terpin is suing for the remaining sum plus damages, USD 71.4 million in total.

Speaking to Cointelegraph, Terpin said he was „a little surprised to discover that the alleged mastermind was only 15 years old at the time,“ adding his surprise that „supposedly, this was not his first hack or robbery.

Terpin claimed that Pinsky is in possession of $100 million, stating: „We believe he was being sincere when he told one of our informants bitcoin’s halving, explained, the release of new fundraising rules, wesbanco and iberiabank, a broader contraction, well-known and dangerous by text message that he still had $100 million hidden overseas.