Phantom Wallet Hack: $500K Theft & Lawsuit
Phantom Wallet Sued After $500,000 Crypto Theft
A class-action lawsuit has been filed against Phantom Technologies and OKX, alleging negligence and security failures leading to a significant cryptocurrency theft and the collapse of the Wiener Doge token.
Key Findings
- $500,000+ in crypto assets stolen due to alleged vulnerabilities in the Phantom wallet.
- The alleged insecure storage of private keys in browser memory allowed hackers to bypass security measures.
- The hack caused a 99% drop in Wiener Doge token value, impacting numerous investors.
- The lawsuit alleges Phantom operated as an unregistered trading platform, neglecting cybersecurity best practices.
- OKX is implicated for its role in the rapid liquidation of stolen assets.
The lawsuit, filed in the Southern District of New York, claims Phantom falsely advertised its wallet's security while knowingly compromising user data. On January 20, hackers exploited a vulnerability in Phantom's browser extension, gaining access to private keys stored insecurely in browser memory. This allowed them to drain funds from Liam Murphy’s account, a significant investor and creator of the Wiener Doge token. The stolen funds were subsequently liquidated, triggering a catastrophic 99% decline in Wiener Doge’s value—from a peak of $3 million to less than $0.01 per token.
The complaint highlights Phantom’s alleged knowledge of the security flaw and its decision to remain silent. The lawsuit accuses Phantom of:
- Operating an unregistered trading platform
- Negligence in cybersecurity
- False advertising
- Aiding and abetting money laundering (through OKX)
OKX's involvement is also challenged, with the lawsuit stating OKX facilitated the conversion of stolen Wiener Doge tokens to Solana. Thirteen additional plaintiffs joined Murphy, seeking compensation for their losses. The case underscores the critical importance of robust security measures in the cryptocurrency space.
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