Apple sued for $1.8M Bitcoin drain: plaintiffs say App Store flipped "trust us" into "send your seed phrase

Three Bitcoin holders are suing Apple over a counterfeit Sparrow Wallet application they allege drained a combined $1.8 million from their holdings, accusing the company of promoting the App Store as a trusted marketplace while failing to screen listings impersonating the desktop-only wallet. The complaint was filed Friday in the US District Court for the Northern District of California, naming plaintiffs James Ramirez, Christopher Ellis and Jalen Delgado, each of whom reported entering their seed phrase into the fraudulent app. Losses cited in the filing total roughly $875,000, $840,000 and $120,000, respectively, and occurred during 2025, with Ramirez reporting his 7.4 BTC loss to Apple the same day it happened.

Sparrow Wallet is available only on Windows, macOS and Linux, according to its developer, Craig Raw, who holds the US trademarks on the name. Any iOS listing under the Sparrow brand is therefore an impersonation. The complaint alleges that Apple ranked the fake app and included it in curated cryptocurrency collections, "effectively recommending a fraudulent application to consumers alongside legitimate ones." Ramirez said no one from Apple contacted him after his report, and that fraudulent Sparrow apps remained listed when the complaint was filed.

Raw has publicly criticized Apple over copycat malware on the App Store since January 2024, when he tweeted, "There is still a scam 'Sparrow Wallet' app on the @Apple App Store, despite myself and others having reported it weeks ago. Worse, you have to install it to report it. Always go to the wallet's website to find the link to download it. App stores will not protect you." He later submitted an App Store listing whose only purpose was to tell iOS users that Sparrow is desktop-only; Apple rejected it as "placeholder content," then flagged his developer account for termination over "dishonest activity," a decision reversed on appeal.

Apple told MacRumors it has removed apps impersonating Sparrow Wallet and terminated developer accounts linked to those apps, adding that it takes action against any app that does not comply with App Store guidelines and encourages developers and users to report violations. The company declined to comment on the lawsuit to TechCrunch, instead pointing to an ecosystem analysis that found it rejected more than 371,000 malicious App Store submissions. The firm noted that there are currently no Sparrow Wallet copycats on the App Store.

The eight-count complaint, including fraud, negligent misrepresentation and strict products liability, asks the court to treat the App Store as a product placed into the stream of commerce, a theory that would expose Apple to strict liability for failing to warn. The plaintiffs argue that Apple's contrary disclaimers sit buried "deep within" click-through terms rather than surfaced where users are selecting wallet applications, and seek damages and injunctive relief over the alleged losses in $BTC.