Court orders AT&T to answer $24M crypto SIM swap suit

A federal court in Los Angeles has ruled that telecoms giant AT&T must answer a lawsuit raised by a cryptocurrency investor in respect of a multi-million dollar crypto hack.

Investor Michael Terpin lost a reported $24 million when AT&T gave unwarranted access to a SIM card he owned to hackers. Raised as a violation of the Federal Communications Act and breach of contract, Terpin is seeking some $24 million compensatory damages, as well as up to $200 million in punitive damages.

The case is in fact the second occasion on which Terpin has been hacked by this type of scam, and comes despite his own warnings to AT&T that his account was high risk. Furthermore, Terpin took his own additional security measures to protect his account, which he alleges were then undermined by the unauthorized SIM-swap.

In a press release, it was announced that Judge Otis Wright III ruled Terpin had objected to the exemption of liability for negligence and other grounds contained within AT&T’s standard customer agreement. Wright stated:

Mr. Terpin’s claim… seeks to declare AT&T’s wireless customer agreement as unconscionable, void against public policy, and unenforceable in its entirety. … Specifically, he objects to the exculpatory provision that exempts AT&T from liability from its own negligence, acts or omissions of a third party, or damages or injury caused by the use of the device. … Mr. Terpin alleges that as a result of these illegal contract provisions, the entire customer agreement is unenforceable because the central purpose of the agreement is tainted with illegality.… AT&T and Mr. Terpin have adverse legal interests of sufficient immediacy and reality to warrant a claim for declaratory judgment. The terms of the wireless customer agreement are directly implicated by this lawsuit, particularly the terms that Mr. Terpin has identified.

Pierce O’Donnell, lead counsel for Terpin, said the judge ‘strongly repudiated’ AT&T’s attempt to dismiss the case, which he said would allow Terpin to demonstrate the facts in front of the court.

“Judge Wright strongly repudiated AT&T’s audacious bid to prevent Michael from demonstrating to a jury the carrier’s contempt for consumers’ privacy and utter disregard of its legal obligations to prevent this very type of SIM swap and financial crime,” O’Donnell said. “The evidence will show that AT&T not once, but twice allowed hackers posing as Michael to obtain his SIM card.”

Terpin himself welcomed the judgement, and said it was essential to protect other investors from falling victim to similar hacks in future.

“We must hold AT&T accountable. If AT&T demonstrated the same zeal to totally revamp its porous security system as it does to suppress the damning evidence of its callous indifference to its customers, we would not be in court,” Terpin said in a statement.