Veritaseum Accuses T-Mobile of Gross Negligence Over $8.6M SIM-Swap Hack

Veritaseum alleges T-Mobile authorized no less than five SIM swaps, one of which brought the loss of $8.6 million in crypto.

Jul 23, 2020 at 12:15 p.m. UTC
Updated Sep 14, 2021 at 9:34 a.m. UTC

Veritaseum is suing the U.S.' third-largest phone carrier for failing to prevent a hack that led to the loss of millions of dollars-worth of cryptocurrency.

  • The New York-based crypto project and its CEO, Reggie Middleton, filed a complaint Tuesday against T-Mobile accusing the company of "gross negligence" and failing to protect its customers.
  • Founded in 2014, Veritaseum is a peer-to-peer market platform that allows users to directly trade with one another.
  • The project hosted an initial coin offering (ICO) for its VERI token in April 2017.
  • It alerted investors that July that hackers had stolen 36,000 tokens (then around $8.6 million) who promptly dumped it all on an exchange.
  • Per Tuesday's filing, Veritaseum says hackers gained control of the phone belonging to Middleton in a SIM-swap attack – where a victim's phone number is transferred to another device.
  • Not only did attackers then have access to confidential information, such as passwords, they could also bypass two-factor authentication and drain Middleton of all of his cryptocurrency.
  • In the complaint, Veritaseum and Middleton say T-Mobile confirmed up to five unauthorized SIM swaps, including some months after being first alerted to the attack.
  • Veritaseum alleges that T-Mobile's "gross negligence" led to the hack and severely damaged Middleton's mental health.
  • It is accusing the phone carrier on one count of failing to protect its customer, one count of causing mental distress and on three counts of negligence.
  • Veritaseum and Middleton are calling for a jury trial and is suing for damages.
  • In 2019, the Securities and Exchange Commission (SEC) accused Middleton, a former Huffington Post writer, of failing to register Veritaseum's ICO and spreading false information to investors.
  • The case was subsequently settled for $9.5 million last November.

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