- Phantom wallet faces lawsuit over $500,000 crypto theft due to alleged security vulnerabilities.
- Plaintiff claims private keys were stored in “unencrypted browser memory” making them vulnerable to Malware.
- The theft reportedly collapsed the Wiener Doge project which had reached a $3.1 million market cap.
A lawsuit filed Monday against Phantom Technologies claims security flaws in its popular Solana Blockchain wallet led to the theft of more than $500,000 worth of Wiener Doge tokens. According to court documents obtained by Decrypt, a cybercriminal allegedly accessed the victim’s private key from web browser memory, gaining complete access to three linked wallets without facing multi-factor authentication barriers.
The complaint, filed April 14 in the Southern District of New York by Thomas Liam Murphy and 13 other plaintiffs, alleges that Phantom exposed users to malware attacks despite marketing its security as “best-in-class.” The lawsuit claims the $3 billion-valued wallet service, which hosts approximately $25 billion in assets across 10 million users, stored private keys in unencrypted browser memory.
Security Allegations and Response
Murphy reportedly notified Phantom immediately after the theft, but the company responded that as a “noncustodial wallet,” Murphy bore “sole responsibility” for the loss. The lawsuit contends that the attacker used Phantom’s built-in “Swapper” feature to liquidate tokens worth approximately $500,000 for only $37,537 in Solana (SOL), effectively destroying the entire Wiener Doge project, which had reached a $3.1 million market capitalization according to data from GeckoTerminal.
The complaint further alleges that Phantom “lacked any system for transaction velocity checks, geolocation anomalies, or withdrawal limits,” drawing unfavorable comparisons to Coinbase wallet’s security features.
Exchange Partnership Controversy
The lawsuit also names cryptocurrency exchange OKX, which partnered with Phantom in November 2024. The plaintiffs claim Phantom’s failure to disclose its “direct integration with OKX” was “deceptive,” particularly following OKX’s guilty plea to federal money laundering charges for allegedly facilitating $5 billion in illicit transactions.
The plaintiffs seek at least $3.1 million in damages, claiming Phantom violated the Commodity Exchange Act by operating as an unregistered trading platform while avoiding regulatory oversight through “superficial claims of decentralization.”
Neither Phantom Technologies, Thomas Liam Murphy, nor OKX immediately responded to Decrypt’s request for comments regarding the allegations. Phantom has not yet issued a public statement addressing the lawsuit’s claims.
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