Apple has been sued by three Bitcoin holders who say a counterfeit Sparrow Wallet app on the App Store tricked users into entering seed phrases and led to combined losses of about $1.8 million.
The complaint was filed on July 24 in the U.S. District Court for the Northern District of California. It brings eight counts, including fraud, negligent misrepresentation, and strict products liability.
Plaintiffs say seed phrases were entered into a fake app
According to the filing, each plaintiff entered a seed phrase into the app. James Ramirez lost 7.4 BTC, valued in the complaint at $875,000. Christopher Ellis lost $840,000. Jalen Delgado lost 1.05 BTC, valued at $120,000.
Sparrow Wallet runs only on Windows, macOS, and Linux. It has never released an iOS version, so the complaint argues that any App Store listing under the Sparrow name was an impersonation.
Complaint says Apple was alerted but fake listings remained
The filing says Ramirez reported the app and his losses to Apple on July 25, 2025, the same day the loss occurred. Nine days later, Ellis downloaded a Sparrow app from the App Store.
The complaint states that Apple had not contacted Ramirez about the report by the time the lawsuit was filed, and that fraudulent Sparrow apps were still listed when the complaint was submitted.
It also alleges, on information and belief, that Apple ranked the fake app and placed it in curated cryptocurrency collections, “effectively recommending a fraudulent application to consumers alongside legitimate ones.”
Developer says warnings date back to January 2024
Craig Raw, the developer of Sparrow Wallet and the holder of U.S. trademarks for the name, has warned about copycat malware on Apple’s App Store since January 2024. In a post on X at the time, he said a scam version remained live weeks after it had been reported.
He wrote: “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.”
Raw later said he submitted an App Store listing intended only 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.” That decision was later reversed on appeal.
Apple declined to comment on the suit
Apple declined to comment on the lawsuit to TechCrunch and instead pointed to its latest ecosystem analysis. The company said it had rejected more than 371,000 malicious App Store submissions.
Apple also said there are currently no Sparrow Wallet copycats on the App Store.
One claim asks court to treat App Store as a product
Count seven asks the court to treat the App Store as a product placed into the stream of commerce. If that argument succeeds, Apple could face strict liability for an alleged failure to warn.
The complaint also argues that Apple’s disclaimers to the contrary are buried “deep within” click-through terms.