A judge in California has ruled in favor of AT&T, dismissing the $24 million lawsuit filed by crypto investor Michael Terpin, who accused the telecoms firm of negligence and fraud after losing his digital assets in a SIM swap attack in 2017. In August 2018, Terpin had sued AT&T for $224 million, with $24 million covering the loss of his crypto funds and $200 million in punitive damages. While the judge authorized Terpin to proceed with his claim for losing his digital assets, he threw out the $200 million punitive damages claim in September 2020, citing the lack of safeguards from third-party hacks.
In his latest ruling on March 28, Judge Otis Wright II quashed Terpin’s remaining claim, stating that the telecom company is not liable for damages, even though Terpin’s losses were made possible through an insider who provided unauthorized access to his phone account. Investigators had later revealed that a 15-year-old hacker was involved in stealing Terpin’s crypto, along with 20 other co-conspirators who orchestrated the theft of $100 million in cryptocurrency through SIM swap attacks.
While there is a lack of comprehensive data on SIM swapping and its prevalence, reports indicate that it has been on the rise since 2015, with the FBI receiving 1,611 complaints of such attacks in 2021 alone, resulting in losses of $68 million. From 2018 to 2020, the agency had received 320 such complaints, with victims losing $12 million. SIM swapping involves unauthorized control of a mobile phone account, enabling access to the victim’s information, including SMS text-based 2FA codes to access financial accounts.