Apple has once again come under legal fire over a fraudulent cryptocurrency app that allegedly passed App Store review and cost users nearly $2 million. Here are the details.

Over the years, there has been no shortage of crypto-related scam apps that have slipped through the App Store review process, leaving users with significant losses.

In 2023, Apple removed a fake Trezor wallet app after it rose to the top of App Store search results, and the following year, a fraudulent Rabby Wallet app became the subject of reports about stolen funds. Much earlier, in 2017, a fake MyEtherWallet app ranked third in the Finance category on the App Store before being removed.

Then, just over a year ago, an iPhone user named Daniell Shin filed a class-action lawsuit after losing more than $80,000 through Swiftcrypt, a fake crypto trading app downloaded from the App Store.

In April of last year, CoinDesk reported that a fake Ledger Live app distributed through the App Store had stolen at least $9.5 million in cryptocurrency from more than 50 victims.

Now Apple is once again being accused of failing to prevent a crypto-related scam app from appearing in the App Store.

As MacRumors reports, three customers have filed a lawsuit, claiming they lost a total of $1.8 million due to a fake Sparrow Wallet app that exploited the fact that there is no official Sparrow Wallet app for iOS.

In their lawsuit, the plaintiffs argue that Apple invests significant resources in building the App Store’s reputation as a secure marketplace, yet fails to properly vet and monitor the apps it distributes. They also claim that other fake Sparrow Wallet apps remain available on the App Store despite having been reported to Apple.

From the document:

The plaintiffs relied on Apple’s repeated assurances and a multi-year marketing campaign portraying the App Store as a safe and trustworthy marketplace when they downloaded what appeared to be a legitimate Sparrow app for storing and trading digital assets. In reality, the Sparrow app turned out to be a fraudulent counterfeit designed to steal funds by intercepting user credentials and redirecting their digital assets to cybercriminals. Users discovered that their accounts had been invalidated and their cryptocurrency assets transferred to the scammers’ personal wallets. This fraud succeeded precisely because Apple leveraged the consumer trust it had deliberately cultivated for over a decade, positioning the App Store as an exceptionally safe and reliable environment.

The three plaintiffs accuse Apple of violating consumer protection laws in California, Louisiana, and Massachusetts.

They are also bringing claims of fraudulent and negligent misrepresentation, fraudulent concealment, and failure to warn users about the risk of fake crypto-related apps appearing in the App Store.

Top comment from Atlas Liked by 9 people

Cryptocurrency is, first and foremost, a scam. It doesn’t make the world a better place. Its purpose is to enrich a few people using slow technology that is terribly harmful to the environment, while ignoring what lies behind it.

According to the complaint, they are seeking reimbursement from Apple for the bitcoins they lost, as well as additional damages. They are also asking the court to require Apple to strengthen its App Store review process and provide clearer warnings about fraudulent crypto-related apps.

In response, Apple told MacRumors that it “took immediate action to remove any apps impersonating Sparrow Wallet from the App Store and to close the developer accounts associated with these apps,” adding that users can report suspicious apps through https://reportaproblem.apple.com.

To view the full text of the complaint, follow this link.