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Phantom Wallet Sued for $3.1 Million Over Security Flaws in $500K Crypto Theft
A lawsuit has been filed against Phantom Technologies, a major crypto wallet provider, alleging that security vulnerabilities in its platform led to the theft of over $500,000 worth of Wiener Doge tokens. The suit seeks at least $3.1 million in damages and accuses Phantom of operating as an unregistered trading platform while evading regulatory oversight.
According to the complaint, the cyberattack occurred when a user’s browser wallet stored their decrypted keys in active memory, making them vulnerable to malware attacks. The hackers then used Phantom’s built-in “Swapper” feature to liquidate the Wiener Doge tokens for a fraction of their value, resulting in losses totaling $500,000.
The lawsuit also targets OKX, a crypto exchange that partnered with Phantom in November 2024. OKX has previously pleaded guilty to federal money laundering charges for facilitating $5 billion in illicit transactions. The plaintiffs claim that OKX’s integration with Phantom enabled the unauthorized liquidation of the stolen assets and that both companies violated regulatory standards.
The suit accuses Phantom of negligence in cybersecurity protection, false advertising, and aiding money laundering through its partnership with OKX. The plaintiffs also allege that Phantom is a decentralized exchange (DEX) in disguise, offering trading services without registering as a DEX or meeting applicable security standards.
Phantom has denied any wrongdoing, stating that it gives users full control of their funds and cannot prevent scams from malicious links. However, the company does work with law enforcement when criminal activity is reported and offers in-app security education and safety resources to its users.
The lawsuit highlights the need for stronger cybersecurity measures in the crypto industry, particularly for major wallet providers like Phantom that host assets worth approximately $25 billion across 10 million active users. The case serves as a stark reminder of the importance of secure storage and responsible trading practices in the digital asset market.
It remains to be seen how this lawsuit will play out, but one thing is clear: investors must remain vigilant and prioritize security when managing their crypto assets.
Source: https://blockonomi.com/phantom-wallet-sued-for-3-1-million-over-security-flaws-in-500k-crypto-theft/
