tl;dr
A lawsuit filed against Phantom Technologies alleges security flaws in its Phantom crypto wallet led to the theft of over $500,000 in Wiener Doge tokens from a developer's account after a hacker accessed the user's private keys stored in unencrypted browser memory. The suit claims Phantom misreprese...
A recent lawsuit accuses Phantom Technologies of critical security flaws in its Phantom crypto wallet that led to the theft of over $500,000 in Wiener Doge tokens from a developer’s account. The attacker reportedly accessed private keys stored in unencrypted browser memory, bypassing multi-factor authentication and gaining unrestricted control over the victim’s funds.
The suit alleges that despite marketing its wallet as secure and “best-in-class,” Phantom’s design exposed users to malware and crypto theft by failing to implement key safety measures such as transaction velocity checks, geolocation anomaly detection, and withdrawal limits. This lack of safeguards allowed a cybercriminal to rapidly liquidate stolen Wiener Doge tokens for a fraction of their value, which drastically destroyed the project’s market cap that once peaked at $3.1 million.
Further complicating matters, the complaint implicates Phantom’s partner, crypto exchange OKX, highlighting an undisclosed integration site and OKX’s recent guilty plea for federal money laundering charges involving $5 billion in illicit transactions. Plaintiffs claim Phantom misled users by operating as an unregistered trading platform, dodging regulation under false claims of decentralization.
Phantom denies any wrongdoing, asserting that users retain full control over their funds and that they cooperate with law enforcement when criminal activity is reported. The company emphasizes its in-app security education but maintains that it cannot prevent scams caused by malicious links.
The plaintiffs seek at least $3.1 million in damages, pressing for accountability over what they describe as reckless security failures and deceptive practices. This case shines a spotlight on the vulnerabilities tucked away in even popular wallets serving millions, underscoring the urgent need for stronger protections and transparency in the rapidly evolving crypto ecosystem.