• 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.

Cryptocurrency investor Michael Terpin has sued a recent high school graduate for stealing $24 million worth of his cryptocurrency through a SIM swap, bypassing the two-factor authentication that protects a crypto wallet. Terpin is also seeking a total of at least $45 million…

— Wu Blockchain (@WuBlockchain) October 3, 2024

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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