LOS ANGELES, Feb. 25, 2020 (GLOBE NEWSWIRE) -- (via Blockchain Wire) - The Hon. Otis Wright II ruled yesterday that plaintiff Michael Terpin can proceed with statutory, contract, and tort damages claims against AT&T Mobility for $24 million resulting from the theft of cryptocurrency that he contends was directly caused by an AT&T agent bribed by a criminal gang. The Court ruled in Terpin’s favor, denying AT&T’s motion to dismiss and finding that Terpin had adequately alleged both proximate cause between AT&T’s conduct and the theft as well as the requisite special relationship to invoke the economic loss doctrine to pursue certain non-contract claims. The decision was entered on Monday, February 24, 2020.
Terpin was a longtime AT&T Mobility cell phone customer when he was hacked in January 2018 by a cyber gang. In a matter of hours, the thieves stole $24 million of cryptocurrency while Terpin desperately tried to call the telephone giant’s fraud hotline. One of the ringleaders was recently indicted in federal court in New York.
Terpin plans to file a second amended complaint within 21 days to supplement his request for punitive damages by demonstrating how AT&T was both knowledgeable of, and responsible for, an ongoing sequence of cryptocurrency thefts due to SIM swaps dating back to well before Terpin’s hack. The Federal Judge, sitting in Los Angeles, had previously ruled that Terpin could proceed to trial under two other claims: (1) unauthorized access in violation of the Federal Communications Act; and (2) declaratory relief seeking to invalidate AT&T’s contract with its users as “unconscionable, void against public policy, and unenforceable in its entirety…”
In its latest order, the Court rejected AT&T’s argument on proximate cause, where the phone company alleged that Terpin had not proven that he owned any cryptocurrency or the precise method in which it was stolen. “At this stage, Mr. Terpin is not required to reconstruct the precise sequence of the hack,” wrote the Court, “but rather, merely establish a ‘natural and continuous sequence’ of plausible events connecting the hackers’ access to his phone number to the theft of his cryptocurrency.”
The Court also upheld Terpin’s argument that he may sue under the economic loss doctrine because a “special relationship” existed between AT&T and Terpin once it linked his telephone number to personal data. Moreover, the Court wrote: "Mr. Terpin’s damages were allegedly suffered precisely because AT&T provided inadequate security measures to protect his SIM card...," and that "AT&T is morally culpable because Mr. Terpin alleges it is ‘[a]ware of the vulnerability of its customers in having their [p]ersonal [i]nformation stolen through SIM swapping’ but AT&T ‘has done nothing to prevent that practice, including enforcing its own privacy policy and adhering to its promises to provide special or additional protection to its customers’ accounts.’”
“I am grateful that despite the delays and AT&T’s attempts to obfuscate the facts, the Court was able to wisely ascertain that we had indeed met all the conditions to demonstrate a sufficient connection between AT&T’s behavior and the theft of my cryptocurrency to proceed to trial on those claims,” said Terpin. “We look forward to demonstrating with compelling evidence the ‘advance knowledge and conscious disregard’ threshold by AT&T in its prior knowledge and ratification of ongoing SIM swaps causing economic loss.”
“AT&T’s latest abortive attempt to disconnect Michael’s landmark lawsuit is a measure of its desperation to avoid the inevitable day of reckoning before a federal jury of cell phone consumers,” observed Terpin’s lead attorney Pierce O’Donnell, a senior partner with Greenberg Glusker Fields Claman & Machtinger in Los Angeles. “AT&T should spend its money on fixing its global security problem and protecting its vulnerable customers like my client.”
About Michael Terpin
Michael Terpin is one of the highest-profile thought leaders, entrepreneurs, and investors in the blockchain sector. He co-founded the first angel group for bitcoin investors, BitAngels, in early 2013, and the first-ever digital currency fund, the BitAngels/Dapps Fund, in March 2014. He is currently a senior advisor to Alphabit Fund, one of the world’s largest digital currency hedge funds. Terpin’s work with more than 100 token crowdsales, including Augur, Ethereum, MaidSafe, Neo and Qtum, led to CNBC calling Terpin “the godfather of crypto.” He is founder and CEO of Transform Group, the leading PR and advisory company for the public blockchain industry, and he organizes the long-running CoinAgenda global investor conference series and monthly BitAngels investor events in more than a dozen cities.
Prior to his involvement in the blockchain, Terpin founded and sold Marketwire, the first Internet-based press release distribution company, now owned by the Intrado division of Apollo Global Management and his first PR firm, The Terpin Group, now part of FTI Consulting. Terpin is on the board of Syracuse University’s prestigious Newhouse School of Communications, and he is a popular speaker on global blockchain circuit.
For a copy of the original complaint and corresponding exhibits, please visit the following links:
Complaint: https://www.greenbergglusker.com/content/uploads/2018/08/Complaint-as-Filed-3063362-1.pdf
Exhibits: https://www.greenbergglusker.com/content/uploads/2018/08/Exhibits-A-D-Filed-3063361-1.pdf
Media contact: attlawsuit@transformgroup.com
Legal spokespersons and attorneys for plaintiff Michael Terpin:
PIERCE O’DONNELL (SBN 081298)
PODonnell@GreenbergGlusker.com
TIMOTHY J. TOOHEY (SBN 140117)
TToohey@GreenbergGlusker.com
PAUL BLECHNER (SBN159514)
PBlechner@GreenbergGlusker.com
GREENBERG GLUSKER FIELDS CLAMAN & MACHTINGER LLP
1900 Avenue of the Stars, 21st Floor
Los Angeles, California 90067-4590
Telephone: 310.553.3610
Fax: 310.553.0687