Bart Stephens, the co-founder and managing partner of the cryptocurrency fund Blockchain Capital and a notable early supporter of cryptocurrencies, is suing an unidentified hacker for stealing $6.3 million worth of bitcoin, ether, and other digital currencies from his electronic wallets.
Bart Stephens, the co-founder of Blockchain Capital, has filed a lawsuit against an unidentified hacker named Jane Doe. The hacker allegedly used personal data from the internet and dark web to manipulate security procedures of Stephens' cellular network provider in May. The hacker then ordered a new phone and ported Stephensâ personal number to a SIM card in the new device, a tactic known as a SIM-swap attack.
The FBI has previously warned of the rise in SIM-swap attacks, especially targeting individuals with significant cryptocurrency holdings. In 2022, about $72 million was stolen via SIM-swap attacks, a slight increase from $68 million in 2021.
Blockchain Capital, founded in 2013 by Bart and his brother Brad Stephens, is a prominent crypto fund based in San Francisco. It has invested in renowned crypto startups like Worldcoin, Coinbase, Kraken, and the NFT marketplace Opensea. The company's Twitter account was reportedly compromised earlier this month, as per Cointelegraph.
The hacker reportedly used Stephensâ cell phone number to reset passwords and bypass two-factor authentication on various digital wallets, eventually stealing digital assets. Before transferring $6.3 million to their private wallets, the hacker boasted to Stephens about their ability to hack any phone number in the U.S. They used one of Stephens' compromised accounts to send this message.
Additionally, the hacker attempted to extract bitcoin and ethereum valued at $14 million from Stephensâ "custodial cold wallet". However, the theft was halted thanks to an alert Blockchain Capital employee. This alert was the first indication to Stephens that his assets were under threat, as mentioned in the lawsuit filed by his attorney.
On May 15, a day following the theft, Stephens' mobile service provider acknowledged that he had been a target of a SIM-swap attack. About 50% of the stolen funds were channeled through cryptocurrency tumbler exchanges, which intermingle digital assets to obscure transaction sources, making it more challenging to trace stolen cryptocurrencies. Stephens declined to comment when approached.
SIM-swap attacks involve hackers "social engineering" or persuading mobile network customer service representatives to disclose personal details about their target. Once in possession of these details, attackers can then clear security hurdles required to transfer a victimâs phone number to a new SIM card, under the hacker's control.
In a notable instance of a SIM-swap attack, Nicholas Truglia from Florida was sentenced to 18 months imprisonment in December 2022 for misappropriating over $20 million from crypto investors. One of the victims was Michael Terpin from Transform Ventures, as reported by Bloomberg.
Bart Stephens has always been a vocal supporter of cryptocurrencies, frequently clashing with skeptics such as JP Morgan CEO Jamie Dimon, who has often labeled bitcoin a scam. In a response to such criticisms in 2017, Stephens said on CNBC, "I would advise Jamie Dimon and others to research thoroughly first. It's not a fraud or a Ponzi scheme. It's a resilient technology poised to revolutionize various sectors."
