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A Los Angeles federal judge hearing the long-drawn-out feud between Michael Terpin and AT&T Mobility over allegations on SIM-swapping, cryptocurrency theft, and black letter law has dismissed the motion, according to The Block.
As per the report, Hon. Otis Wright II has dismissed all causes of action in the entire complaint, leaving aside only a declaratory judgment claim, with a leave to amend in 20 days.
While the court agreed that AT&T should have foreseen the criminal acts to happen, “Mr. Terpin fails to sufficiently allege proximate cause.” The ruling added that Terpin unsuccessfully connected how granting the hackers access to his phone number caused him to lose $24 million.
“At this stage, the Court is left to speculate how having access to Mr. Terpin’s phone number resulted in the theft of cryptocurrency,” the ruling stated.
Meanwhile, Stephen Palley, a lawyer specializing in crypto, suspects that the “plaintiff will be able to overcome the pleading in an amended pleading.”
He further explained that although the reason for dismissal can be solved with a probable amend, it still remains to be seen if AT&T can defend itself by pointing out the damages that were inflicted by independent third-party criminal acts.
Palley also expressed his astonishment “that a sophisticated crypto holder would leave this much crypto on an exchange, continuing to use SMS two-factor authentication with a phone that had already been compromised. This isn’t to excuse AT&T but, well, you can see the argument they will make.”
Initially, the federal judge rejected the telco giant’s request to dismiss all the claims filed by Terpin in 2018. The crypto entrepreneur is seeking $200 million in punitive damages and $24 million of compensatory damages from AT&T.
It can be recalled that Terpin alleged that about $24 million worth of cryptocurrencies was lifted from his account because of “AT&T’s willing cooperation with the hacker, gross negligence, violation of its statutory duties, and failure to adhere to its commitment in its Privacy Policy.” He claimed that he was hacked twice within 7 months while using AT&T as his service provider and that his digital currencies were taken via a “digital identity theft” of his account.
As per CNBC, the judge tossed 13 out of 16 claims, saying that Terpin failed to show how the theft of his cell phone number was connected to the cryptocurrency claims. AT&T told the news outlet that the telecommunication firm was “pleased the court dismissed most of the claims” and “the plaintiff will have the opportunity to re-plead but we will continue vigorously to contest his claims.”
Meanwhile, crypto loan startup YouHodler was recently under fire from allegedly exposing troves of private financial data including credit card information and various user transaction because it forgot to protect its server with a password.
