Three iPhone users are suing Apple after a counterfeit crypto wallet slipped through the App Store’s review process and drained more than $1.8 million from their accounts. The complaint, filed Friday in the Northern District of California, argues that Apple’s insistence on exclusive control over iOS distribution, long wielded as a shield against regulators demanding third-party app stores and sideloading, becomes a liability when the gatekeeper fails to keep the fakes out.
The scam wore a familiar name
The plaintiffs downloaded an app called Sparrow Wallet, a brand familiar to Bitcoin users but one that has never released an official iOS version. James Ramirez lost roughly $875,000, Christopher Ellis about $840,000, and Jalen Delgado around $120,000 after transferring funds into the impostor. The real Sparrow’s creator, Craig Raw, has publicly criticized Apple for allowing copycats to persist on the store, a detail the complaint cites as evidence that Apple knew the problem existed.
The walled garden on trial
The lawsuit takes direct aim at Apple’s central competitive argument: that its curated App Store makes iOS safer than open alternatives. “By retaining exclusive control over which apps are permitted on Apple devices, Apple has structured its platform to ensure that consumers depend entirely on its promise of safety and reliability,” the filing states. The plaintiffs want a jury trial, their money back, and mandatory risk disclosures, a demand that, if granted, would force Apple to admit its curation is not the guarantee its marketing suggests.
Apple says the system worked, eventually
Apple declined to comment on the suit but told TechCrunch that impersonation apps violate its guidelines and are removed swiftly. The company also noted there are currently no Sparrow Wallet copycats on the store and pointed to its 2025 transparency report, which said it rejected more than 371,000 submissions for copying, spam, or misleading users. That figure is meant to show the filter catches the vast majority of bad actors. The plaintiffs’ counter is simpler: the filter missed the one that mattered to them.