Telecom giant AT&T is heading back to court as part of an ongoing legal battle stemming from its alleged failure to protect user information.
The case, which began in 2020, centres around a SIM swap scam that resulted in the theft of $24 million in cryptocurrency from investor Michael Terpin. A recent appeal overturned a portion of a summary judgment that was previously in AT&T’s favour, reigniting the legal fight.
The Origins of the AT&T Case Over SIM Swap Scam
The legal dispute started in 2020 when cryptocurrency investor Michael Terpin filed a lawsuit against a recent high school graduate, alleging that the latter stole $24 million worth of cryptocurrency Trigger from Terpin by using a SIM swap to get over two-factor authentication that was safeguarding one of Terpin’s cryptocurrency wallets.
When Ellis Pinsky and his accomplice paid an AT&T employee to transfer Terpin’s SIM card information onto a blank card in their phone in 2018, Ellis Pinsky was just 15 years old. The long and intricate legal struggle that followed gained Pinsky the nickname “Baby Al Capone” and engaged him in a possibly precedent-setting case against AT&T.
Appeals Court Overturns Part of Judgment
Terpin’s claims were properly rejected, according to a panel in the Ninth Circuit Court of Appeals, with the exception of the one made in reference to Section 222 of the Federal Communications Act. This protects Terpin’s SIM card information. Terpin’s fraud allegation against AT&T and his demand for $216 million in punitive damages was dismissed by the court.
Terpin will now demand from AT&T “$24 million plus at least $14 million of interest plus his attorney’s fees for a total of at least $45 million,” according to lead counsel Pierce O’Donnell.
Only three of the sixteen allegations that Terpin initially filed against AT&T were permitted to move forward.
A Complicated Legal History
Terpin found Pinsky by using his investigative abilities, and Pinsky gave him back the $2 million. When Pinsky turned 18 in May 2020, Terpin filed a lawsuit against him for $71.4 million, which included three times the maximum damages permitted by racketeering laws in addition to the remaining stolen money. Pinsky nevertheless agreed to provide testimony in Terpin’s favour in the lawsuit against AT&T.
In 2019, Terpin successfully sued Nicholas Truglia, Pinsky’s accomplice, for $75.8 million. Truglia was 21 years old when the theft occurred. In 2022, a Rolling Stone feature piece detailed the extraordinary outcomes of Truglia and Pinsky’s online meeting. Recently, Pinsky received his degree from New York University.
The case has wider implications for telecom providers’ obligations to safeguard consumer data, especially in light of the rise in SIM swap schemes. The flaws in two-factor authentication systems that rely on SIM cards and phone numbers are brought to light by the loss of Terpin’s Bitcoin.
As the court battle proceeds, the focus remains on whether AT&T can be held liable for its role in the SIM swap scheme and the resulting financial losses. The ultimate decision may establish a crucial standard for how telecom firms respond to incidents of a similar kind going forward.