Apple is facing a lawsuit after three users alleged they lost a combined more than $1.8 million in Bitcoin by downloading a fake Sparrow Wallet app from the App Store, raising fresh questions about the company’s app review process and security claims.
The complaint was filed on July 24 in the U.S. District Court for the Northern District of California by plaintiffs James Ramirez, Christopher Ellis, and Jalen Delgado. The plaintiffs allege Apple promoted the App Store as a safe and trusted marketplace while allowing fraudulent cryptocurrency apps to remain available.
They claim Apple failed to properly review and monitor apps. The lawsuit seeks compensatory, treble, and punitive damages. It also asks the court to require Apple to strengthen its App Store review process and warning system for fraudulent crypto apps.
The $1.8M phishing scam
According to court filings, the three plaintiffs installed what appeared to be an official iOS port of Sparrow Wallet during mid-2025. Upon opening the application, users were prompted to import their existing Bitcoin wallets by typing in their 12- or 24-word recovery seed phrases.
Once entered, the recovery phrases were transmitted directly to attacker-controlled infrastructure, enabling instantaneous fund transfers:
- Jalen Delgado downloaded the application on May 1, 2025, resulting in a $120,000 loss.
- James Ramirez lost 7.4 Bitcoin (valued at ~$875,000) on July 25, 2025, and immediately reported the fraudulent listing to Apple.
- Christopher Ellis downloaded the same fraudulent app nine days later on August 3, 2025, losing ~$840,000, indicating the listing remained active despite prior victim reports.
The lawsuit follows a similar incident in April 2026, when Philadelphia musician Garrett “G. Love” Dutton lost 5.92 BTC, worth about $424,000, after downloading a fake Ledger Live app from Apple’s Mac App Store. Later, blockchain investigator ZachXBT tracked the stolen funds to addresses associated with KuCoin, and criticized the security of Apple’s App Store.
Apple accused of negligence
The complaint claims Apple was negligent, engaged in fraudulent and negligent misrepresentation, failed to warn users about fake cryptocurrency apps and violated consumer protection laws.
The plaintiffs claim Apple built consumer trust through years of marketing that described the App Store as a secure marketplace while allegedly failing to prevent fraudulent applications from reaching users. They also argue Apple should have warned users that cryptocurrency wallet apps appearing in the App Store could still be fake and that users should never enter seed phrases without independently verifying an app’s authenticity.
The lawsuit seeks compensatory damages, punitive damages, treble damages where permitted by law, restitution, attorneys’ fees, and court orders requiring Apple to strengthen its App Store review process and provide clearer warnings about cryptocurrency-related risks.
No official iPhone wallet
The case centers on Sparrow Wallet, a Bitcoin wallet officially available only on Windows, macOS, and Linux. The software does not have an official iOS version.
Its developer, Craig Raw, has previously criticized Apple over fake Sparrow Wallet apps appearing in the App Store, warning users that scammers were impersonating the project to steal Bitcoin.
According to the complaint, the plaintiffs argue that Apple was aware of fake Sparrow apps through user reports and developer complaints but continued to promote the App Store as a trusted platform.
Apple removed fake apps
Apple told MacRumors it has since removed apps impersonating Sparrow Wallet and terminated the developer accounts associated with them.
The company added that both developers and users can report apps that violate App Store guidelines and said it takes action against applications that fail to comply with its policies.
The lawsuit is in its early stages, and Apple has not yet filed a response in court. The case will now proceed through the federal court process, where Apple is expected to formally answer the allegations or seek dismissal before any trial moves forward.
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