Three cryptocurrency users are suing Apple after losing a total of $1.8 million to a counterfeit crypto wallet app available on the iOS App Store. The fraudulent app, posing as the popular Sparrow Wallet, drained their Bitcoin holdings over several months without detection.
How the Scam Unfolded
The original Sparrow Wallet is a desktop-only program, with no legitimate iOS version. Despite this, a fake app mimicking Sparrow’s branding and interface appeared on the App Store between May and August 2025. Users who downloaded this imposter app were tricked into importing or creating wallets, but their funds were silently redirected to scammers’ addresses.
The lawsuit filed in a federal court in California claims Apple’s App Store review process failed to stop the counterfeit app from operating for months. The three plaintiffs reported losses of $875,000, $840,000, and $120,000 respectively. They argue Apple’s advertising of a secure marketplace is misleading given the repeated presence of scam apps.
Craig Raw, the developer behind the genuine Sparrow Wallet, has been warning Apple about fake versions on the store for years. Despite these warnings, counterfeit apps continued to surface, which the plaintiffs say shows a pattern of negligence from Apple.
This case is not isolated. Earlier in 2026, a fake Ledger Live app stole over $9.5 million from more than 50 victims on the Mac App Store, targeting assets like Bitcoin, Ethereum, and Solana.
Apple states it has removed the fraudulent Sparrow apps and terminated the related developer accounts. The company also highlighted its 2025 efforts, including shutting down 193,000 developer accounts and preventing $2.2 billion in potentially fraudulent transactions.
The scam highlights the risks faced by users of self-custody wallets, where no third party can reverse transactions or recover stolen funds once a scammer gains access. Unlike traditional banking apps, self-custody models leave users fully responsible for security.
