Crypto.news covers the federal lawsuit filed by Murphy’s Law founding partner Liam Murphy and 13 co-plaintiffs against Phantom Technologies following a security exploit that resulted in the theft of more than $500,000 in Wiener Doge memecoin tokens.
According to the complaint filed April 14 in New York, a hacker accessed Murphy’s private key by extracting it from Phantom’s browser extension memory, a vulnerability the company allegedly knew about but never fixed or disclosed. The attacker drained three Phantom wallets without needing to bypass two-factor authentication and used Phantom’s built-in Swapper feature to convert the stolen tokens into Solana through OKX’s smart contract routing. The incident caused the price of Wiener Doge to collapse from a valuation of over $1 million to less than one cent per token.
The plaintiffs accuse Phantom of negligence, fraud, and deceptive practices, alleging the platform handled billions of swaps and collected fees while functioning more like an unregistered trading platform than a simple wallet. OKX is also named as a co-defendant due to its alleged involvement in facilitating the stolen token swaps and its history of money laundering violations.
The article notes that Phantom has experienced the fastest growth among web3 wallets, attracting more than 15 million active users and facilitating over $20 billion in token swaps in 2024, while raising $150 million at a $3 billion valuation in its January Series C round.