Catenaa, Tuesday, April 22, 2025-Phantom Technologies is facing a federal lawsuit in New York over alleged security vulnerabilities in its noncustodial crypto wallet that led to a theft of more than $500,000 in digital assets.
Filed on April 14 in the Southern District of New York, the suit accuses Phantom of failing to encrypt private keys stored in browser memory. This oversight, the complaint claims, allowed attackers to extract sensitive information and steal Wiener Doge tokens from three wallets.
The stolen assets were allegedly swapped using Phantom’s built-in exchange tool, converting them to $37,537 in Solana. The attack reportedly triggered a crash in the Wiener Doge project’s market value, which had peaked at around $3.1 million.
Attorney Thomas Liam Murphy, representing the plaintiffs, argued that Phantom failed to implement basic safeguards such as encryption and transaction velocity checks.
Plaintiffs are seeking at least $3.1 million in damages and accuse Phantom of violating the Commodity Exchange Act and operating as an unregistered trading platform.
Phantom has denied all allegations and said it will pursue a dismissal, asserting that its wallet design prioritizes user control over funds.
The case also highlights Phantom’s partnership with crypto exchange OKX, which has been under scrutiny for alleged money laundering violations.
Analysts say the partnership, formed in late 2024, could deepen regulatory concerns as Europe moves to enforce stricter crypto compliance under MiCA rules.
