Apple faces Sparrow Wallet lawsuit over fake iPhone app

The Apple Sparrow Wallet lawsuit puts a familiar crypto risk in a bigger arena: users say they trusted an App Store listing and lost $1.8 million in Bitcoin. For everyday investors, the case is a reminder that a wallet app can look legitimate while being built to steal the keys that control crypto.

Three Bitcoin holders sued Apple in federal court in the Northern District of California in a complaint filed July 24. The filing brings eight counts, including fraud, negligent misrepresentation and strict products liability.

According to the complaint, James Ramirez lost 7.4 BTC, valued in the filing at $875,000. Christopher Ellis lost $840,000, and Jalen Delgado lost 1.05 BTC, valued at $120,000. The plaintiffs say each person entered a seed phrase into the counterfeit app. A seed phrase is the recovery code that gives access to a crypto wallet; whoever has it can control the funds.

Why is Apple being sued over Sparrow Wallet?

Sparrow Wallet is a Bitcoin wallet that runs on Windows, macOS and Linux, according to its website. The lawsuit says Sparrow Wallet has no iOS version, so an App Store app using that name would have been an impersonation.

The complaint says Ramirez told Apple about the app and his loss on July 25, 2025, the same day it occurred. Nine days later, Ellis downloaded a Sparrow app from the App Store and later lost $840,000, according to the filing. The plaintiffs also allege Apple had not contacted Ramirez about his report, and that fraudulent Sparrow apps were still available when the complaint was filed.

The lawsuit further alleges, based on information and belief, that Apple ranked the fake app and placed it in curated cryptocurrency collections. The plaintiffs argue that this made the counterfeit app appear alongside legitimate crypto products.

What did Sparrow Wallet’s developer say?

Craig Raw, the developer of Sparrow Wallet and holder of U.S. trademarks for the name, has publicly warned about copycat iOS apps. In a January 2024 post on X, Raw said a scam “Sparrow Wallet” app remained on Apple’s App Store weeks after he and others had reported it. He also told users to download wallets through the project’s official website rather than relying on app stores.

Raw later said he tried to submit an App Store listing meant only to tell iOS users that Sparrow was desktop-only. According to Raw, Apple rejected that listing as “placeholder content” and then flagged his developer account for termination over “dishonest activity.” Raw said the account action was reversed on appeal.

What is Apple saying?

Apple declined to comment on the lawsuit to TechCrunch. The company instead pointed to its latest ecosystem analysis, which said Apple rejected more than 371,000 malicious App Store submissions. Apple also said there are currently no Sparrow Wallet copycats on the App Store, according to TechCrunch.

One legal claim in the case asks the court to treat the App Store as a product placed into commerce. That matters because strict products liability can make a company responsible for certain product-related harms without the same need to prove negligence. The complaint argues Apple’s disclaimers are buried in click-through terms and do not adequately warn users.

The court has not resolved those claims. For crypto users, the facts alleged in the case underline a basic security rule: a wallet’s seed phrase is the asset’s control point, and entering it into the wrong app can hand over the funds.

This story draws on original reporting from Decrypt.