Judge allows $24m SIM hack victim’s case against AT&T to proceed

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on Feb 26, 2020
Updated: Mar 11, 2020
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  • Crypto investor who was allegedly robbed of $24 million in crypto by hackers due to AT&T employee's participation was allowed to proceed with his case.
  • Despite the company's attempts to dismiss the complaint, the judge has decided that the investor has enough facts to make the case.
  • In cases of a "special relationship" between the involved parties, tort claims can be made in cases where one party breaches the contract.

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As some may remember, a cryptocurrency investor known as Michael Terpin suffered a SIM swap hack, which robbed him of as much as $24 million that he was holding. Terpin then accused mobile operator AT&T of being partially responsible for the incident in a lawsuit, which was just allowed to proceed by the California District Court’s Judge Otis Wright II.

The case was initiated back in August 2018, when Terpin alleged that one of the company’s employees, Jahmil Smith, had received a bribe, and in return, allowed a ‘criminal gang’ to assist with the fraud. According to Terpin, the control of his SIM card was then passed to the hackers, and that his cryptocurrencies were stolen while he was on the phone with the company, trying to regain access to his own phone.

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The judge denied AT&T’s attempts to dismiss the case

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Last July, the court had found that, while Terpin alleged that the hack was ‘reasonably foreseeable,’ he had not shown proximate cause, as he did not know that granting hackers access to his card can end up in the theft of his money. The investor was then allowed leave to amend his complaint, and the judge has decided that he has now sufficiently alleged proximate cause between the theft and AT&T’s conduct.

The company also claimed that Terpin failed to provide facts that would support his claims that 2FA was enabled. However, the judge stated that Terpin has alleged enough facts for the Court to determine that the hackers may have used the 2FA method to steal his funds.

AT&T then used another approach to dismiss the claims by stating that Terpin’s financial losses are barred by economic loss doctrine. Basically, the parties that enter the contract should be able to predict potential losses that may result if the agreement has been broken.

The judge stated that Terpin had provided AT&T with his private information, understanding that the firm can adequately protect it, which is enough for a “special relationship” to occur. The judge did not rule against the company on all points in the notion, and Terpin was granted 21 days to amend the complaint and re-file it.

Now, the investor is suing the company for $23.8 million, which is the amount he desires as compensation. He also wants an additional amount of $200 million in punitive damages.

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