Apple sued after fake Sparrow Wallet app on App Store drains $1.8M in Bitcoin

Key points

• Three plaintiffs filed suit against Apple in California on July 24, 2025, over roughly $1.8 million in stolen Bitcoin.
• The fake iOS app impersonated Sparrow Wallet, a desktop-only Bitcoin wallet with no official iPhone version.
• Losses: about $120,000 (Delgado, May 1), $875,000 (Ramirez, July 25) and $840,000 (Ellis, around August 3).
• Sparrow's developer Craig Raw publicly warned about impersonator apps as early as January 6, 2024.
• Plaintiffs want stolen crypto reimbursed, damages assessed, and a court order forcing Apple to improve fake-app detection.

Three people are suing Apple after a counterfeit cryptocurrency wallet app, downloaded from the official App Store, allegedly drained about $1.8 million in Bitcoin from their accounts.

Filed on July 24 in California and first reported by BleepingComputer, the complaint says the fake app impersonated Sparrow Wallet, a program used to store and send Bitcoin. The real Sparrow runs only on desktop computers. There's no official iPhone version, a detail that sits at the heart of the case.

How did people lose their Bitcoin?

The victims installed what looked like Sparrow Wallet from Apple's App Store, then entered their seed phrase, a string of secret words that acts as the master key to a crypto wallet. Whoever knows the seed phrase controls the coins. The app sent those words to the scammers, who emptied the wallets within minutes.

Jalen Delgado downloaded the fake app around May 1, 2025, and lost roughly 1.05 Bitcoin, about $120,000. James Ramirez installed it on July 25 and lost 7.4 Bitcoin, about $875,000. Christopher Ellis followed around August 3 and lost about $840,000. Ramirez reported the theft to Apple the same day, but the complaint says Apple never responded to him or his follow-up reports.

What is Apple accused of doing wrong?

The plaintiffs argue Apple sold the App Store as a safe, curated place to get software, then failed to police it. They also claim Apple's editorial team ranked the fake Sparrow app and included it in cryptocurrency app collections, putting the scam alongside legitimate products.

Apple had been warned long before any of these losses. Craig Raw, who built the genuine Sparrow Wallet, posted publicly on January 6, 2024 that a scam version was still live on the App Store weeks after he and others reported it. Raw later submitted a placeholder app that simply told users any Sparrow app on iOS was fake. Apple initially flagged his developer account for termination, then reversed course.

Apple told BleepingComputer it acted quickly to remove impersonator apps and shut down the developer accounts behind them, and that customers can report suspected fraud through its Report a Problem service. The company also said developers can submit intellectual property disputes to its legal department.

For context on Apple's security posture this year, we reported on 3 July 2026 that Apple pushed emergency patches for two flaws already being exploited against iPhones and Macs. A platform simultaneously patching critical kernel holes and hosting an active scam app isn't a contradiction, but it does show how different the threat surfaces are.

What are the victims asking for?

The three plaintiffs want their stolen Bitcoin reimbursed, plus compensatory damages, punitive damages and legal fees. They're also asking the court to compel Apple to publish and improve its fake-app detection procedures, and to display warnings about the risks of cryptocurrency apps.

Should you worry if you hold self-custody crypto?

Yes, if you download wallets from app stores rather than the developer's own site. A real wallet app won't ask you to type your seed phrase into a form to "restore" or "verify" it on first launch. App store placement, even in a curated collection, isn't proof of legitimacy. Sparrow's own site states clearly it's desktop only. That one check would've stopped all three losses here.