Apple Sued by Bitcoin Holders Over Counterfeit Sparrow Wallet App That Drained $1.8 Million in Crypto

Three Bitcoin holders have filed a federal lawsuit against Apple, alleging the company allowed a counterfeit version of the Sparrow Wallet app to remain on its App Store despite repeated warnings, resulting in a combined $1.8 million in stolen cryptocurrency.

The complaint, filed July 24 in the U.S. District Court for the Northern District of California, brings eight separate counts against Apple, including fraud, negligent misrepresentation and strict products liability. According to the filing, each of the three plaintiffs entered their wallet seed phrases, the sensitive credentials used to access and control cryptocurrency holdings, into what they believed was a legitimate iOS version of Sparrow Wallet, a widely used Bitcoin wallet application.

The lawsuit identifies the three plaintiffs and their reported losses: James Ramirez lost 7.4 bitcoin, valued at approximately $875,000; Christopher Ellis lost $840,000; and Jalen Delgado lost 1.05 bitcoin, valued at roughly $120,000. Sparrow Wallet has never released an official iOS application and operates exclusively on Windows, macOS and Linux, meaning any version of the app listed on Apple's App Store under that name is, by definition, an unauthorized impersonation.

According to the complaint, Ramirez reported both the fraudulent app and his financial loss to Apple on July 25, 2025, the same day the theft occurred. Ellis, however, downloaded a version of the fake Sparrow app from the App Store nine days after Ramirez's report had already been submitted, according to the filing. The complaint states that no one from Apple ever contacted Ramirez regarding his report, and that fraudulent Sparrow-branded apps remained listed on the App Store at the time the lawsuit was filed.

The complaint goes further than simply alleging Apple failed to remove the fraudulent listing. It claims, on information and belief, that Apple's own systems actively ranked the counterfeit app and featured it within curated cryptocurrency app collections on the platform, a decision the plaintiffs' attorneys characterize as Apple "effectively recommending a fraudulent application to consumers alongside legitimate ones."

Craig Raw, the developer who built the legitimate Sparrow Wallet software and holds U.S. trademark rights to the name, has publicly warned about copycat versions of his application appearing on Apple's App Store since at least January 2024. In a post on the social media platform then known as Twitter that January, Raw wrote that a scam version of his app remained live on the App Store weeks after he and others had reported it. "There is still a scam 'Sparrow Wallet' app on the @Apple App Store, despite myself and others having reported it weeks ago," Raw wrote at the time, adding that users are required to install a suspicious app before they are able to report it through Apple's official channels.

Raw has said he separately attempted a more proactive fix, submitting his own App Store listing for Sparrow Wallet whose sole purpose was to inform iOS users that the software is available only for desktop operating systems. According to Raw, Apple rejected that submission, classifying it as "placeholder content" that did not meet the App Store's guidelines. Raw has said Apple subsequently flagged his own developer account for potential termination, citing what the company described as "dishonest activity," though that decision was later reversed after Raw appealed it.

Apple declined to comment directly on the lawsuit when contacted by the technology publication TechCrunch. Instead, the company pointed to its most recent App Store ecosystem transparency report, which stated that Apple had rejected more than 371,000 malicious app submissions across its platform during the reporting period. Apple also noted that, as of its most recent review, there were no active Sparrow Wallet copycat applications listed on the App Store.

A central legal argument in the lawsuit centers on how courts should classify Apple's role in distributing third-party applications. Count seven of the complaint specifically asks the court to treat the App Store itself as a product that has been placed into the stream of commerce, a legal framework that, if accepted, could expose Apple to strict products liability for failing to adequately warn consumers about fraudulent applications available through its platform. The plaintiffs argue that Apple's existing disclaimers regarding third-party app risks are inadequately disclosed, describing them in the filing as buried "deep within" the company's click-through terms of service that most users never fully read before agreeing to them.

The case adds to a growing body of litigation and regulatory scrutiny facing major app store operators over their responsibility for screening and removing fraudulent applications, particularly those targeting cryptocurrency holders, a category of financial fraud that has grown substantially as digital asset adoption has expanded. Cryptocurrency-related scams distributed through seemingly legitimate mobile applications have become an increasingly common vector for theft, in part because stolen crypto transactions are typically irreversible once completed, unlike many forms of traditional banking fraud that can sometimes be reversed or insured against.

The lawsuit is proceeding in federal court in California, where Apple is headquartered, and is likely to draw continued attention given the broader implications its outcome could have for how app store operators are held legally accountable for content posted by third-party developers on their platforms.