$1.8 Million Lost to Fake Cryptocurrency App, Apple Sued by Victims

Group Lawsuit Questions App Store's Review System Over Fake Cryptocurrency App

Apple has been sued by three victims in a federal court in California for a total of approximately $1.8 million (about 290 million yen) worth of Bitcoin (BTC) stolen by a fake cryptocurrency wallet app available on its official app store, the App Store.

The plaintiffs argue that despite Apple’s extensive advertising claiming that the "App Store is safe and reliable," the company failed to properly review and monitor fraudulent apps. They are seeking the return of their lost funds, punitive damages, and disclosure of measures to prevent recurrence, claiming violations of California's consumer protection laws.

The Deceptive Tactics of the Fake Sparrow Wallet and Serious Damages

The issue revolves around a fake app masquerading as the desktop-only cryptocurrency wallet "Sparrow Wallet," which is originally designed for Windows, macOS, and Linux.

While there is no mobile (iOS) version of the genuine Sparrow Wallet, the fraudsters published the fake app on the App Store, pretending it was a legitimate service. Users who downloaded the app were prompted to enter a 12 or 24-word "seed phrase" necessary for wallet recovery, which led to their funds being fraudulently transferred to the scammers' accounts.

The victims, James Ramirez, Christopher Ellis, and Jalen Delgado, reported losing approximately $875,000 (about 140 million yen), $840,000 (about 130 million yen), and $120,000 (about 19 million yen) respectively between May and August 2025.

Allegations of Ignoring Prior Warnings and Featuring the Fake App as "Recommended"

According to the lawsuit, Craig Raw, the legitimate developer of Sparrow Wallet, pointed out the existence of the fake app as early as January 2024 and reported it to Apple multiple times.

Furthermore, Raw attempted to publish an informational app to raise awareness that there was no mobile version, but instead faced suspicion from Apple and received warnings about account suspension. Despite this, Apple is accused of failing to adequately utilize warnings issued more than a year before the damages occurred, ranking the fake app highly in searches and including it in recommended cryptocurrency app collections.

Apple's Response and Growing Criticism of Security

In response to the situation, Apple stated that it has removed the fake app and suspended related malicious developer accounts.

While the company refrained from commenting on the specifics of the lawsuit, it stated, "We have a reporting channel for intellectual property infringement and fraudulent apps, and we respond quickly when violations of our guidelines are confirmed." Additionally, Apple highlighted its achievements in preventing over $2.2 billion (about 359.48 billion yen) in fraudulent transactions and suspending over 190,000 malicious accounts.

However, similar scams have occurred in the past on the App Store, such as a fake Ledger Live app for Mac that resulted in losses of $9.5 million (about 1.55 billion yen). Calls for greater review responsibility from major platforms and enhanced security for cryptocurrency apps are expected to increase in the future.

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