Phantom Wallet Sued Over$ 500K Meme Coin Theft Related to Accusations of Security Fraud

A developer’s account was stolen from over$ 500, 000 worth of Wiener Doge ( WIENER ) tokens as a result of a lawsuit filed on Monday against Phantom Technologies.

A fraudster “hacked into Liam’s specific system and exported his secret key to his Phantom wallets from his web browser’s running memory,” according to a copy of the court record obtained by .

According to the problem, the attacker had to rely on multi-factor authentication to gain “unrestricted entry to all of the money in Liam’s three co-linked Phantom wallets.”

According to a complaint made by Murphy’s Law’s foundation companion Thomas Liam Murphy and 13 other plaintiffs on April 14 in the Southern District of New York, Phantom’s safety was “best-in-class,” exposing users to infection and blockchain fraud.

The Solana blockchain community’s preferred wallet, Phantom, is thought to be the go-to budget for users who use the app. They are reportedly stored their secret keys in “unencrypted browser memory,” making them vulnerable to malicious extraction.

A Phantom director told Decrypt,” We are aware of the complaint that has been filed against Phantom, strongly deny any claims of crime, and look forward to demonstrating why this complaint may be dismissed.” The allegations in this lawsuit are unreliable in every way.

Phantom said it works with law enforcement when criminal activity is reported, but that it gives users complete control of their funds and can’t stop scams from malicious links. Additionally, it stated that it provides resources for in-app security education and training.

Checks and restrictions

Murphy claims he immediately reported the theft to Phantom, but the business allegedly responded that it was “operating a noncustodial wallet,” meaning that Murphy was” sole responsibility” for any loss of his crypto.

According to the lawsuit, Phantom hosts assets worth about$ 25 billion distributed among 10 million active users.

Additionally, it is claimed that a cybercriminal allegedly used Phantom’s” Swapper” feature to sell Wiener Doge tokens worth about$ 500,000 in Solana ( SOL ) for only$ 37, 537.

According to GeckoTerminal’s data, that massive liquidation allegedly destroyed the entire Wiener Doge project’s value, which had at its peak a market capitalization of$ 3.1 million.

In contrast to how Coinbase wallets operate, Phantom “lacked any system for transaction velocity checks, geolocation anomalies, or withdrawal limits,” according to the complaint.

Additionally, the suit mentions OKX, a crypto exchange that partnered with Phantom in November of that year. The complaint cites OK X’s guilty plea to federal money laundering charges for facilitating$ 5 billion in illegal transactions.

The lawsuit claimed that Phantom’s “failure to disclose its direct integration with OK X” was “deceptive.”

The plaintiffs are suing for at least$ 3.1 million in damages, alleging that Phantom’s use of” superficial claims of decentralization” to evade regulatory scrutiny and to operate as an unregistered trading platform violated the Commodity Exchange Act.

Phantom has not yet responded to the accusations in the media. request for comments was not immediately returned by Murphy and OKX.

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