Reggie Middleton, the CEO of the crypto coin company Veritaseum, is suing telecommunications provider T-Mobile for allegedly allowing the theft of USD 8.7 million in crypto coins in a series of SIM exchange attacks.
According to the files released on July 22, Middleton was the first target of the SIM Crypto Cash exchangers during July 2017. Despite immediately reporting the incident to T-Mobile, Middleton claims to have been the victim of four successful SIM exchanges during the rest of 2017, and other attacks during 2018 and 2019.
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The lawsuit charges that T-Mobile has „abjectly failed“ to protect its customers‘ personal and financial information.
What is a SIM exchange attack?
SIM swapping attacks are executed by a hacker with the help, usually unintentional, of an employee of a telecommunications provider, who reassigns the target’s SIM card to a phone under the hacker’s control.
Once control of the SIM card is secured, the attacker attempts to access sensitive accounts controlled by the victim, such as e-mails, online banking and wallets or crypto-currency exchange accounts.
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Middleton’s lawyer says:
„As a result of T-Mobile’s gross negligence in protecting plaintiffs‘ information, its negligent hiring and supervision of T-Mobile employees who were responsible for safeguarding that information, and its violation of laws expressly protecting mobile phone carrier customer information, plaintiffs lost $8.7 million in crypto currency.“
The lawsuit adds that Middleton has „suffered and continues to suffer severe anxiety, fear and emotional distress related to repeated cases of identity theft.
In November, Middleton and Veritaseum settled the company’s initial currency offering (ICO) fraud claims for 2017 and paid $9.4 million to the U.S. Securities and Exchange Commission (SEC).
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Telecommunication companies face legal action
Lawsuits against telecommunications providers for allowing SIM exchange attacks have increased in the last year, and AT&T is currently facing at least two lawsuits from cryptosecurity investors for failing to prevent the attacks.
In addition to suing AT&T, BitAngels founder and pioneer Michael Terpin has filed a civil lawsuit against an 18-year-old man for planning the attacks that caused a loss of nearly $24 million in crypto currency.
In June, a 20-year-old Californian was charged for his role in 28 SIM exchange attacks.