Michael Terpin’s $24M Crypto Lawsuit Against AT&T Revived by Federal Court

Key Insights:

• Michael Terpin’s $24 million lawsuit against AT&T moves forward, alleging telecom failure led to a SIM swap crypto theft.
• The court reinstates Terpin’s claim under the Federal Communications Act, requiring AT&T to protect customer data from hacks.
• SIM swap attacks targeting telecom security raise concerns as cryptocurrency-related hacks continue to increase in frequency.

The Ninth Circuit Court of Appeals has reinstated a central claim in Michael Terpin’s $24 million lawsuit against AT&T. Terpin, a cryptocurrency investor, claims that AT&T’s failure to protect his account led to a SIM swap hack, resulting in the theft of his cryptocurrency. The court’s decision restores Terpin’s claim under Section 222 of the Federal Communications Act (FCA), which requires telecom companies to safeguard customer data.

This development revives a portion of the lawsuit that was previously dismissed, allowing Terpin to continue his pursuit of damages from AT&T.

SIM Swap Attack and the Theft of Cryptocurrency

In 2018, Terpin’s phone number was compromised through a SIM swap attack. This type of fraud happens when hackers trick telecom providers into transferring control of a phone number to a new SIM card. Once they control the number, they can intercept calls and texts, including verification codes for accounts.

According to Terpin’s lawsuit, a group of hackers, led by Ellis Pinsky, who was 15 years old at the time, paid an AT&T employee to transfer Terpin’s phone number. After gaining control of his number, the hackers accessed Terpin’s cryptocurrency accounts, changed his passwords, and stole $24 million worth of cryptocurrency. Although Pinsky returned part of the stolen amount, another hacker, Nicholas Truglia, was later ordered to pay Terpin $75.8 million in damages by a Los Angeles court.

Legal Case Reinstated After Previous Dismissal

Terpin’s lawsuit was initially reduced after parts of it were dismissed by the courts. However, the Ninth Circuit’s recent decision to reinstate his claim under Section 222 of the FCA is a significant development. This section of the law requires telecom companies to protect customers’ personal information, which Terpin alleges AT&T failed to do.

The court ruled that Terpin had presented enough evidence to proceed with his claim that AT&T’s negligence contributed to the SIM swap attack and the subsequent cryptocurrency theft. This decision allows Terpin to seek $24 million in damages, in addition to interest and legal fees.

Although the court has restored the FCA claim, it did narrow the case by upholding the dismissal of some of Terpin’s fraud and negligence claims against AT&T.

AT&T’s Response and Broader Security Concerns

In response to the ruling, AT&T has maintained its position that many of Terpin’s accusations were dismissed and expressed confidence in defending itself against the remaining allegations. The company has apologized to Terpin for the theft but has not admitted any liability in the case.

This lawsuit comes at a time when concerns over telecom security are rising, particularly regarding customer information vulnerabilities. In July, AT&T was reportedly targeted by another hacking group that gained access to customer call records and text messages. 

While AT&T has not officially confirmed the incident, it is reported that the company paid $400,000 in Bitcoin to the hackers to have the stolen data erased.

SIM swap attacks, in which hackers manipulate mobile service providers to gain access to sensitive accounts, are becoming an increasing threat. These types of breaches often lead to significant financial losses, particularly for individuals who hold large amounts of cryptocurrency.

Impact on Telecom and Consumer Security

The reinstatement of Terpin’s lawsuit could lead to broader changes in how telecom companies handle security, especially in protecting customer information from SIM swap fraud. The Ninth Circuit’s ruling could encourage other consumers affected by similar hacks to pursue legal action against telecom providers.

Terpin’s attorney, Pierce O’Donnell, described the court’s decision as a win for consumers, suggesting that it could pave the way for more lawsuits involving SIM swap fraud and telecom company negligence. As the case proceeds, it may set a precedent for how courts handle cases involving the intersection of telecommunications security and cryptocurrency theft.