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Phantom Sued After Hacker Exploits Critical Security Flaw

Attorney Liam Murphy and a group of investors have filed a lawsuit against Phantom Technologies and OKX, alleging that a security flaw in Phantom’s crypto wallet led to the theft of over $500K and the collapse of Murphy’s digital asset project, Wiener Doge.

False Advertising

Filed in the Southern District of New York, the complaint accuses Phantom of falsely advertising its wallet as secure while knowingly storing decrypted private keys in browser memory, a flaw exploited by hackers on January 20th.

Source: U.S. District Court (Southern District Of NY)

The attacker allegedly drained Murphy’s funds and used Phantom’s “Swapper” tool to convert them to Solana (SOL), causing Wiener Doge to crash 99% in value, from $3.10 per token to under $0.01.

Failure To Act

The lawsuit claims Phantom was aware of the risks and failed to act, and that OKX enabled the token liquidation by providing trading infrastructure. The suit includes claims of negligence, false advertising, and aiding money laundering.

Thirteen additional plaintiffs, mainly consisting of Murphy’s friends and family, joined the case, seeking damages at $3.10 per lost token.