Three Bitcoin holders are suing Apple after losing a combined $1.8 million to a fake version of the Sparrow Wallet they downloaded from the company's App Store. The lawsuit, filed July 24 in California, accuses Apple of failing to properly review and remove impersonating apps. The plaintiffs say the fraudulent app looked legitimate enough to trick them into handing over their seed phrases.
How the scam worked
Jalen Delgado lost 1 BTC — roughly $120,000 — after downloading a fake Sparrow app in May 2025. James Ramirez lost 7.4 BTC, about $875,000, on July 25, 2025. Nine days later, Christopher Ellis entered his seed phrase into another fake Sparrow app and lost approximately $840,000. All three believed they were using the real wallet.
Sparrow is a desktop-only product. Any iPhone app using its name should have been an immediate red flag. But the fake app appeared inside Apple's curated cryptocurrency app collections, which gave it credibility, the lawsuit alleges.
Apple's response
Apple says it removed the fraudulent apps and terminated the associated developer accounts. The plaintiffs argue that wasn't enough — the damage was already done. Sparrow Wallet founder Craig Raw had been warning Apple about unauthorized mobile versions since early 2024. The company didn't act fast enough, the suit claims.
A wider fake-wallet problem
This isn't an isolated incident. Security firm Kaspersky identified 26 fake crypto wallet apps on the App Store, impersonating brands like MetaMask, Ledger, Trust Wallet, Coinbase, TokenPocket, imToken, and Bitpie. The campaign has been active since at least fall 2025 and is linked to a threat actor group called SparkKitty.
The malicious apps could redirect victims to phishing pages that install developer profiles and trojanized wallet versions. That gave attackers direct access to users' funds.
The lawsuit is in its early stages. The plaintiffs are seeking damages and asking the court to force Apple to tighten its app review process. Apple hasn't filed a response yet. For now, the case highlights a persistent blind spot in the App Store's security: fake apps that look real enough to steal millions.
