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Phantom Wallet Sued Over $500K Meme Coin Theft Over Alleged Security Flaw

A lawsuit filed against Phantom Technologies on Monday claims that a security flaw in its crypto wallet allowed the theft of more than $500,000 in Wiener Doge (WIENER) tokens from developer Liam Murphy’s account. Hackers accessed Murphy’s private keys from his computer’s browser memory, bypassing multi-factor authentication. The complaint, which names Murphy and 13 others, alleges that Phantom’s design exposes users to malware and theft, contrary to its claims of “best-in-class” security. The wallet reportedly stores users’ private keys in unencrypted memory, leaving them vulnerable. Despite reporting the theft, Phantom maintains that it is a “non-custodial wallet,” placing the onus for the loss on Murphy. Phantom manages about $25 billion in assets for 10 million users and has been criticized for its lack of transaction safeguards. The lawsuit also takes on crypto exchange OKEx over its partnership with Phantom, citing OKEx’s previous guilty plea to money laundering. The plaintiffs are seeking at least $3.1 million in damages, claiming violations of the Commodity Exchange Act. Phantom has not responded to the allegations.