Is it possible that a self cut micro sim is killing an iPhone ? When Apple introduced the iPhone 4 there where many mobile providers that didn't have micro sim's available so at that time I cut one with a sim card cutter into micro format. Since then I'm using this sim card. Now I borrowed this card to a friend for activating his refurbished iPhone 4, however the iPhone couldn't activate and always fell back to the setup screen. Now at the genius bar the blame the sim card. When I put this card in other iPhones it works perfect. 
Is it really possible that an iPhone gets damaged by a sim card in this way ? 

At the same time I heard from somebody that iPhone 4 have often issues with the sim tray overheating.
An iPhone that is failing activation certainly sounds like a self-cut SIM card could be a problem. 

There's an easy way to tell, however: take someone else's non-cut SIM card and see what happens. If it works, the SIM card is at fault. If it doesn't work, the phone is at fault.