- Reducing vulnerabilities in telecom security, hackers can avoid 2FA and pilfer millions of dollars in Bitcoin using SIM-swap attacks.
- Terpin’s case exposed telecom flaws, and AT&T is being investigated for potential SIM-swap attack involvement.
- The court’s Section 222 finding supports Terpin’s action against AT&T for its data protection practices in the SIM-swap scheme.
Bitcoin investor Michael Terpin sues AT&T a popular telecommunication for $45.5M in damages. After a $24 million bitcoin SIM exchange was completed in 2018, he filed the case. According to Terpin, AT&T did not keep his data safe, so they managed to slip past his two-factor authentication and get into the cryptocurrency wallet.
SIM-Swap Hack of 2018 and Its Principal Players
Ellis Pinsky, a 15-year-old hacker, bought off an AT&T employee in order to carry out the SIM switch in 2018. Pinsky was able to get around Terpin’s two-factor authentication by doing this and moving his SIM card data to a blank card.
By taking over Terpin’s cryptocurrency wallet, Pinsky and his accomplice Nicholas Truglia stole $24 million in digital assets. After Terpin sued Pinsky for $71.4 million, Pinsky later gave back $2 million. Meanwhile, Truglia faced a separate lawsuit from Terpin for $75.8 million in 2019, which Terpin won.
An AT&T employee provided insider assistance in the attack, which exposed a possible security hole in the business’s privacy policies. Since SIM-swap attacks have been a common occurrence in the bitcoin sector, this incident has raised concerns about them.
AT&T’s Role and Ongoing Legal Battle
2020 saw Terpin file a lawsuit against AT&T, seeking $224 million in punitive damages. A judge dismissed most of Terpin’s claims in 2023, awarding AT&T a victory in court.
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However, the Ninth Circuit Court of Appeals recently upheld Terpin’s claim based on Section 222 of the Federal Communications Act, which mandates that telecom carriers protect private customer information.
Notably, the appeals court rejected AT&T’s contention that customer proprietary network information (CPNI) was uncompromised. The court acknowledged that SIM-swap fraud gives malicious actors access to CPNI, but it also stressed that accepting AT&T’s perspective would have ludicrous consequences.
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