Three customers sue Apple after fake wallet app wipes out their Bitcoin

Apple is once again being sued over a scam cryptocurrency app that allegedly slipped through App Store review and cost users nearly $2 million. Here are the details.

App review in trouble yet again

Over the years, there has been no shortage of scam cryptocurrency apps slipping through App Store review and leaving users with substantial losses.

In 2023, Apple removed a fake Trezor wallet app after it climbed to the top of the App Store’s search results, while a fraudulent Rabby Wallet app was linked to reports of stolen funds the following year. Much earlier, in 2017, a fake MyEtherWallet app reached third place in the App Store’s Finance category, before being pulled.

Then, a little more than a year ago, an iPhone user named Danyell Shin filed a proposed class action after losing more than $80,000 to Swiftcrypt, a fake cryptocurrency trading app downloaded from the App Store.

Fast-forward to last April, CoinDesk reported that a fake Ledger Live app distributed through the App Store had stolen at least $9.5 million in cryptocurrency from more than 50 victims.

Now, Apple is once again being accused of failing to keep a fraudulent cryptocurrency app off the App Store.

As spotted by MacRumors, three customers have filed a lawsuit after allegedly losing a combined $1.8 million to a fake Sparrow Wallet app that took advantage of the fact that there is no official Sparrow Wallet app available on iOS.

In the lawsuit, the plaintiffs argue that Apple invests heavily in cultivating the App Store’s reputation as a safe marketplace, but fails to adequately review and monitor the apps it distributes. They also allege that other fake Sparrow Wallet apps remain available on the App Store despite being reported to Apple.

From the filing:

Plaintiffs relied on Apple’s repeated assurances and long-standing marketing campaign portraying the App Store as a safe and trusted marketplace when they downloaded what appeared to be the legitimate Sparrow digital asset storage and trading application. In truth, the Sparrow app was a fraudulent spoof designed to steal funds by capturing users’ account credentials and diverting their digital assets to cybercriminals. Users found their accounts had been wiped out and their cryptocurrency assets transferred to the scammers’ private wallets. This fraud succeeded precisely because Apple exploited the consumer trust it had deliberately cultivated through more than a decade of marketing the App Store as a uniquely safe and trusted environment.

The three plaintiffs are accusing Apple of violating consumer protection laws in California, Louisiana, and Massachusetts.

They also bring claims for fraudulent and negligent misrepresentation, fraudulent concealment, and failure to warn users about the risk of fake cryptocurrency apps appearing in the App Store.

According to the filing, they want Apple to reimburse the Bitcoin they lost and pay additional damages. They also ask the court to require Apple to strengthen its App Store review process, and provide clearer warnings about fraudulent cryptocurrency apps.

In response, Apple told MacRumors that it has “taken swift action to remove any apps impersonating Sparrow Wallet on the App Store and to terminate developer accounts associated with those apps,” adding that users can report suspicious apps through https://reportaproblem.apple.com.

To read the full complaint, follow this link.

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