A man is suing AT&T for $224 million over a $24 million theft of cryptocurrency

[Cal Jeffrey]

Facepalm: An investor who lost $24 million in cryptocurrency due to a SIM-swapping scam is suing AT&T for $224 million. The suit filed on Wednesday claims the telecom is guilty of fraud and gross negligence in connection with the theft.

Reuters reports that cryptocurrency investor Michael Terpin filed his lawsuit with the US District Court in Los Angeles. Terpin claims that on January 7, 2018, hijackers took control of his cell phone account and stole three million tokens of an unnamed cryptocurrency said to be worth $24 million. He is seeking restitution of the coin value plus punitive damages to the tune of $200 million.

The thieves accomplished this through a technique know and “SIM swapping.” Hackers using this method employ social engineering to get a carrier to switch a cell phone number over to a SIM card they control. Once they have control of the account, they can use it to access online accounts and change the passwords locking out the rightful owner. It can even be used to bypass two-factor authentication.

"The three million stolen tokens were worth $23.8 million, the complaint said. Terpin is also seeking $200 million in punitive damages."

SIM swapping is a growing problem. Just last week a college student was arrested (also in LA coincidentally) for stealing over $5 million in crypto from over 40 phones. The technique is popular because it is reasonably easy to pull off and requires no technical skill or hacking prowess.

Its growing popularity has led authorities to warn carriers about the scam, which is another point of contention in Terpin’s suit. The filing alleges that law enforcement had previously contacted AT&T about such frauds and yet the company took no precautions to prevent it. Lawyers claim that this fact is what moves the case from simple ignorance to "gross negligence."

The telecom giant responded to the lawsuit saying, “We dispute these allegations and look forward to presenting our case in court.”

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https://www.techspot.com/news/75986-man-suing-att-224-million-over-24-million.html

 

[cliffordcooley]

I could understand 10 fold for punitive damages (lawyer fees are a *****) on anything under 10K. 10 fold on 23M is money grabbing.

 

[Vrmithrax]

I could understand 10 fold for punitive damages (lawyer fees are a *****) on anything under 10K. 10 fold on 23M is money grabbing.

It's essentially legal haggling. Throw up a number, however ridiculous, and if you win and the courts give you even half of what you ask for, you come out smiling.

 

[senketsu]

Absolutely agree @Vrmithrax, that is the tactic
they sue for $224 million, argue a lot, then agree to settle for a lesser, but still large amount for the guy with the loss. He wins, the lawyers win and AT&T are relieved they don't have pay the $224 million and ongoing lawyer costs of dragging the case out.

 

[petert]

Absolutely agree @Vrmithrax, that is the tactic
they sue for $224 million, argue a lot, then agree to settle for a lesser, but still large amount for the guy with the loss. He wins, the lawyers win and AT&T are relieved they don't have pay the $224 million and ongoing lawyer costs of dragging the case out.

works only in the US - in UK, you have to prove that you actually incurred that financial damage. In UK, the law does not give awards orprizes, and you cannot make a profit using the court. I.e. if the carrier lost you 24milion bucks you cannot sue to get tenfold that amount. You will only sue for 24 million period.

 

[kapital98]

Absolutely agree @Vrmithrax, that is the tactic
they sue for $224 million, argue a lot, then agree to settle for a lesser, but still large amount for the guy with the loss. He wins, the lawyers win and AT&T are relieved they don't have pay the $224 million and ongoing lawyer costs of dragging the case out.

works only in the US - in UK, you have to prove that you actually incurred that financial damage. In UK, the law does not give awards orprizes, and you cannot make a profit using the court. I.e. if the carrier lost you 24milion bucks you cannot sue to get tenfold that amount. You will only sue for 24 million period.

The US largely avoids this as well. In contract and tort claims it's really hard to get punitive damages or lost income.

This doesn't change the tactics (specifically, anchoring). You claim they committed those factors which make lost earnings possible, knowing you almost certainly won't win -- and, if you do, you won't win that much, and then hope to settle for something reasonable.

Since almost no case goes to trial, it's a pretty good tactic. The key is surviving Summary Judgment on your initial petition. Meaning you go into discovery and where a lot of bad things can come out and what becomes very expensive in legal fees. If the plaintiff makes it past summary judgment, then, even if they will still lose, corporations almost always settle.

 

[GregonMaui]

Want to bet an IRS audit shows he never declared this income that he “lost”?

If not he could go to jail for his efforts. Oh wait, everybody is honest, nevermind

 

[alabama man]

Hope he wins the full amount so they start caring about the security issues.

 

[Kibaruk]

Want to bet an IRS audit shows he never declared this income that he “lost”?

If not he could go to jail for his efforts. Oh wait, everybody is honest, nevermind

It's not really income until you do something with that investment like cashing out. If it's giving dividends however it's a different story, and then it would go into what type of account it was and if it had any tax benefits... it's not that easy.

 

[Cal Jeffrey]

Want to bet an IRS audit shows he never declared this income that he “lost”?

If not he could go to jail for his efforts. Oh wait, everybody is honest, nevermind

He's a cryptocurrency mogul. Pretty sure he's on the up and up as taxes are concerned. He could lose his businesses and CC fund.