#Cryptocurrency ‘fraud’ sues T-Mobile for letting him get hacked

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Acting CEO of Veritaseum Reggie Middleton
Getty Images for Zenith Bank

A fraudster who conned investors out of millions is really hacked off at T-Mobile — for allegedly letting scammers take over his accounts and steal $8.7 million in cryptocurrency, according to a lawsuit.

Reginald Middleton, who was ordered to pay a $1 million fine by the US Securities and Exchange commission last year for allegedly misleading investors about his company Veritaseum, claims the phone company let a hacker take over his cell number.

The scheme, called a SIM swap, works when a con artist convinces a cellphone company to switch a customer’s phone number to a device controlled by the thief.

Cellphones have become a crucial part of online security, with users asked to provide their numbers to receive text messages with security codes to confirm their identities.

Once the hacker controlled Middleton’s phone number, they had access to his T-Mobile account, and his “virtual currency accounts, private cloud data storage and computer accounts, email services and possibly other sensitive information,” according to Middleton’s Brooklyn Federal Court papers filed against T-Mobile.

The thieves then stole the hefty pile of crypto cash, charges Middleton, who says in court papers it took just four phone calls in July 2017 for the hacker to get a T-Mobile agent to agree to the SIM swap.

The scam came four months after Middleton’s Veritaseum launched an “initial coin offering,” or ICO, a bid to create a new cryptocurrency and raise funds for Veritaseum.

But the SEC accused Middleton of misleading investors about Veritaseum’s profitability and viability, running afoul of securities laws, and manipulating Veritaseum’s price.

The SEC won an injunction against Middleton, who did not admit or deny the allegations but had to cough up nearly $7.9 million in “ill-gotten gains” in addition to the $1 million fine.

T-Mobile declined comment on the litigation.