Apple sued after fake crypto wallet on App Store allegedly costs users $1.8 million

San Francisco: Apple’s walled garden is facing fresh questions after three cryptocurrency investors alleged that a fake Bitcoin wallet slipped through the company’s App Store checks, costing them more than $1.8 million in combined losses, according to a TechCrunch report.  

The lawsuit, filed in the U.S. District Court for the Northern District of California, accuses Apple of negligence for allowing a counterfeit cryptocurrency application to appear on its App Store despite repeatedly assuring users that apps undergo rigorous review before being approved.

According to the complaint, the three investors downloaded an application posing as Sparrow Wallet, believing it to be the legitimate Bitcoin wallet. They then transferred their Bitcoin holdings into the app, only to discover later that it was fraudulent. The genuine Sparrow Wallet is not available on Apple’s iOS platform.

Court documents state that plaintiff James Ramirez lost around $875,000, Christopher Ellis lost approximately $840,000 and Jalen Delgado lost about $120,000 after using the counterfeit application.

The lawsuit strikes at one of Apple’s long-standing competitive arguments: that its tightly controlled App Store offers greater security than rival mobile ecosystems.

The plaintiffs argue they relied on Apple’s repeated assurances that applications available through the App Store are carefully reviewed and screened for fraud before reaching consumers.

The filing states that Apple’s exclusive control over app distribution on iPhones creates an expectation that users can trust software downloaded through its marketplace.

According to the complaint, Apple has built its reputation around providing a safer digital ecosystem, encouraging customers to depend on its review process when installing apps.

The lawsuit also alleges that concerns about counterfeit versions of Sparrow Wallet had surfaced publicly before the investors suffered their losses.

It points to criticism from Craig Raw, who had previously warned that fake versions of his software were appearing on the App Store. The plaintiffs argue that Apple should have identified and removed the fraudulent applications sooner.

They are seeking compensation for their financial losses, additional damages and a jury trial. The complaint also asks the court to require Apple to provide stronger warnings and disclosures about the risks posed by fraudulent applications that may evade App Store reviews.

Apple declined to comment directly on the lawsuit but defended its App Store security measures in a statement to TechCrunch.

The company said applications that impersonate legitimate software violate its App Store guidelines and are removed when detected. It added that there are currently no fake Sparrow Wallet applications available on the platform.

Apple also pointed to its latest App Store safety report, which said the company rejected more than 371,000 app submissions in 2025 because they copied existing apps, were spam or otherwise attempted to mislead users.

The case is likely to renew debate over Apple’s tightly controlled App Store ecosystem, particularly as regulators and developers continue to question whether the company’s review process is sufficient to protect users from increasingly sophisticated scams.