AT&T faces $224 million lawsuit over cryptocurrency theft

A USA cryptocurrency investor on Wednesday filed a $224 million lawsuit against AT&T, alleging the telecom company's negligence contributed to a hack that robbed him of about $24 million in digital tokens.

In the court documents, Terpin accuses the company of doing "nothing" to protect almost 140 million customers from fraudulent activity, while pointing to a history of AT&T abusing customers' private information.

Michael Terpin has brought legal action against the US telecommunications provider AT&T. The investor and early cryptocurrency advocate filed a 69-page complaint with the U.S. District Court in Los Angeles.

During the document, Terpin claims that a large number of digital coins and tokens were stolen from him on January 7, 2018. The suit filed on Wednesday claims the telecom is guilty of fraud and gross negligence in connection with the theft.

"We dispute these allegations and look forward to presenting our case in court", an AT&T spokesperson told Reuters.

The filing claims that Terpin was the victim of a SIM swap fraud that was made possible by the negligence of AT&T.

As a result, the hackers allegedly were able to access Terpin's personal accounts in early January through AT&T - his service provider - and make off with nearly $24 million in cryptocurrency coins.

He has started some cryptocurrency companies including Bit Angels, the first angel group focused on investing in bitcoin companies. He also helped to set up the first digital currency fund, the BitAngels/Dapps fund in 2014.

At the time of the theft, the three million stolen tokens were worth $23.8 million, the complaint said. The damages sought include the $24 million Terpin lost and $200 million in punitive damages which, as the complaint notes, "might attract the attention of AT&T's senior management long enough to spend serious money on an acceptable customer protection program and measures to ensure that its own employees are not complicit in theft and fraud".

The precise details of the storage of Terpin's tokens are not now known.

SIM swap fraud became an issue more than six years ago and has become an increasing problem, particularly with the growing use of two-factor authentication with hackers often targeting specific individuals. AT&T finally cut off access by the hackers to Mr. Terpin's telephone number on June 11, 2017, but only after the hackers had stolen substantial funds from Mr. Terpin.

The case also highlighted a need for adequate custody services in the cryptocurrency industry.

After all, a hacker would still have required Terpin's username and password to access a secure cryptocurrency wallet.