Apple Sued After Fake iPhone Wallet App Drained $1.8M in Bitcoin

Three Bitcoin holders have sued Apple over a counterfeit Sparrow Wallet app they say drained a combined $1.8 million. The complaint, filed on July 24 in the Northern District of California, brings eight counts including fraud, negligent misrepresentation and strict products liability.

Each plaintiff entered a seed phrase into the app, according to the filing. James Ramirez lost 7.4 BTC, put at $875,000; Christopher Ellis $840,000; and Jalen Delgado 1.05 BTC, put at $120,000. Sparrow Wallet runs only on Windows, macOS and Linux and has never shipped an iOS version, so any App Store listing under that name is an impersonation.

Ramirez reported the app and his loss to Apple on July 25, 2025, the day it happened. Ellis downloaded a Sparrow app from the store nine days later. No one from Apple has contacted Ramirez about that report, the complaint says, and fraudulent Sparrow apps were still listed when it was filed.

The filing also alleges, on information and belief, that Apple ranked the fake app and included it in curated cryptocurrency collections, “effectively recommending a fraudulent application to consumers alongside legitimate ones.”

The developer’s warning

Craig Raw, who built Sparrow Wallet and holds the U.S. trademarks on the name, has flagged copycat malware on Apple’s App Store since January 2024, when he tweeted that a scam version was still live weeks after being reported.

He later stated that he had 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 declined to comment on the lawsuit to TechCrunch, instead pointing to its latest ecosystem analysis which found that 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.

Count seven asks the court to treat the App Store as a product placed into the stream of commerce, which would expose Apple to strict liability for failing to warn. The complaint argues Apple’s contrary disclaimers sit buried “deep within” click-through terms.