Yahoo Finance Veritaseum Accuses T-Mobile of Gross Negligence Over $8.6M SIM-Swap Hack
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.
See also: Crypto Exec’s $1.8M SIM-Swap Lawsuit Has ‘Critical Holes,’ Says AT&T
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