American telecoms giant AT&T has fought back a lawsuit filed against it by a SIM swap victim, requesting the court to dismiss it. The victim claimed that AT&T acted in a systemic negligent manner, leading to the SIM swap and subsequent loss of his $1.8 million crypto stash. In its latest filing, the company claims that the victim is unable to prove that it was responsible in any way for the swap.
The victim, Seth Shapiro lost his crypto to cyber criminals after they swapped his SIM in 2018. Shapiro, who is the head of strategy for blockchain startup VideoCoin, alleged that the criminals colluded with some AT&T employees in their scheme, one that saw him lose over $1.8 million worth of crypto. The employees were fired and are currently facing criminal charges in court.
According to the company however, Shapiro has failed to prove that it was responsible for the loss of his crypto. In its reply to its own motion to dismiss, which it filed last week with the Central District of California, the company laid out several reasons why it believes Shapiro’s case doesn’t hold up.
Shapiro’s lawsuit doesn’t adequately plead proximate case, AT&T claimed. The case jumped from the hackers taking over his phone number to him losing his crypto, skipping all the other details. While it doesn’t deny that the swap took place, it believes that “he must allege facts plausibly suggesting that the particular SIM swap about which he complains did in fact proximately cause the theft here. This distinction between what could happen and what did happen here is the fatal flaw in his Complaint.”
AT&T further believes that it can’t be held liable for the independent intervening of acts of third parties. It also attacks Shapiro’s claims that it engaged in intentional wrongdoing, saying that its ‘failure to implement sufficient security protocols or adequately train its employees’ amounts to negligence, not intentional wrongdoing.
The Dallas, Texas-based company further claimed that the economic loss rule bars Shapiro’s negligence claims, that he didn’t plead essential elements of his Consumer Legal Remedies Act, that his losses don’t qualify under the Computer Fraud and Abuse Act and that he has no ‘colorable defense of his claims for punitive damages.’
The California court will hear the company’s motion for dismissal on the 18th of February. Even if the court sides with AT&T, it will not be the end of its SIM swap woes. It faces yet another lawsuit from a crypto investor who lost $24 million through a swap incident similar to Shapiro’s. The victim, Michael Terpin, sought to get $24 million in compensatory damages, as well as up to $200 million in punitive damages.
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