Sparrow Wallet isn’t installed from the App Store.
I just assumed it was without checking that the software is actually downloaded from GitHub.
Having a suspended developer account also affects applications installed from external sources because unsigned apps get treated almost like they are malware. The application will be blocked from running and placed in quarantine whenever a new update is installed.
I guess current users would still be able to run Sparrow on their Macs. Maybe they would get notifications and warnings. However, there would be no more updates and new users wouldn't be able to install apps from the store. This is all assuming that the software is actually downloaded from the App Store, which Sparrow isn't, as you pointed out.
It feels weird Apple got sued for letting fake crypto apps on their App Store[1], while Apple also plan to terminate account of legit developer because he's trying to stop people from got scammed.
Let's wait and see how long it will take for the next fake Sparrow Wallet for iPhone to appear. Tick tock...
I don't expect the decision will be changed, unless whole Bitcoin community publicly protest against Apple decision.
Luckily, it didn't take long before Apple reverted their decision. And yeah, Craig did get support and Apple probably got a good amount of complaints as well.
And so what?
It's not like Sparrow wallet and this developer ever planned of making apple version of wallet, or create anything related with that.
Sparrow Wallet is available for Mac. Since it's desktop-only, it's not available for the iPhone, though. Fake, phishing apps that pop up every now and then can claim they are for iPhone users.
There is a Mac version, the one that is downloaded from github, and it needs to be signed by a registered developer and notarized by Apple. If it doesn’t have that it gets flagged as a security risk.
What if you build it from source from GitHub? Would such an app still be flagged?
Apps can also be dependent on other apps and services created by the same developer. I don't know if that's the case with Sparrow and Craig. In theory, the software could be compiled from source but still not work properly if other third-party services got terminated together with Craig's developer account.