Apple ignored warnings about a fake wallet app before it drained $1.8 million, lawsuit claims

Apple is facing a federal lawsuit after three cryptocurrency investors say the company’s App Store review process failed to catch a fake Bitcoin wallet app that stole nearly $1.835 million between them, according to a complaint filed July 24 in the U.S. District Court for the Northern District of California.

The lawsuit, filed in the US District Court for the Northern District of California, alleges that Apple’s App Store review process failed to detect an impersonation app masquerading as Sparrow Wallet, allowing scammers to steal users’ cryptocurrency between May and August 2025. The plaintiffs argue that Apple misled consumers by marketing the App Store as a secure marketplace while allegedly ignoring repeated warnings about the fraudulent application. The case has become one of the latest high-profile legal challenges highlighting the risks posed by Crypto scam operations targeting digital asset investors.

Crypto scam app allegedly bypassed Apple’s App Store review

At the centre of the lawsuit is a counterfeit application that claimed to be Sparrow Wallet, a popular open-source Bitcoin wallet. However, the genuine Sparrow Wallet has never offered an iOS application, operating exclusively on desktop platforms including Windows, macOS and Linux.

According to the complaint, the fake application copied Sparrow Wallet’s branding, logo and interface closely enough to convince users it was legitimate. Victims allegedly entered their wallet seed phrases into the application, unknowingly giving scammers access to their Bitcoin holdings.

The lawsuit states that once the recovery phrases were entered, the application secretly transmitted the credentials to wallets controlled by fraudsters, enabling them to drain users’ cryptocurrency.

Among the reported victims, James Ramirez allegedly lost around $875,000 in Bitcoin, while Christopher Ellis reportedly lost approximately $840,000. A third plaintiff, Jalen Delgado, is said to have lost roughly $120,000. Combined, the alleged Crypto scam resulted in losses exceeding $1.8 million, prompting the investors to pursue legal action against Apple.

The plaintiffs argue that the company’s repeated assurances about App Store security created a false sense of confidence that contributed to the success of the Crypto scam.

Crypto scam lawsuit challenges Apple’s security promises

The legal complaint raises three principal arguments against Apple.

First, the plaintiffs contend that Apple’s long-standing defence of its tightly controlled App Store ecosystem carries corresponding responsibilities. Apple has consistently argued before regulators and courts that limiting app distribution to its own marketplace helps protect users from malware and fraudulent software. The lawsuit argues that such claims create a duty to identify and block obvious impersonation applications before they reach consumers.

Second, the complaint alleges misleading advertising. According to the filing, Apple’s description of the App Store as a “safe and trusted place” encouraged users to rely on Apple’s vetting process rather than independently verifying the authenticity of applications they downloaded.

The lawsuit specifically alleges that Apple’s marketing of the App Store as a “safe and trusted place” led consumers to place confidence in applications available through its marketplace.

Third, the complaint claims Apple ignored repeated warnings from the legitimate developer behind Sparrow Wallet before the Crypto scam affected investors.

Developer says warnings were overlooked before Crypto scam losses

According to the lawsuit, Craig Raw, the creator of Sparrow Wallet, had repeatedly alerted Apple about counterfeit applications impersonating his software.

The filing alleges that Raw attempted to publish an official placeholder application on the App Store solely to inform users that Sparrow Wallet was available only on desktop operating systems. However, Apple’s review team initially flagged his developer account for termination over alleged “dishonest activity” before later reversing the decision.

The plaintiffs argue these events demonstrate that Apple had opportunities to identify and remove fraudulent listings before investors suffered losses.

Apple has not publicly commented on the lawsuit itself. However, in a response previously provided to TechCrunch, the company said it had removed the counterfeit applications and terminated the developer accounts associated with them.