99Bitcoins reports on the federal lawsuit filed by Murphy’s Law founding partner Liam Murphy and 13 co-plaintiffs against Phantom Technologies in the Southern District of New York. The complaint alleges that fundamental design flaws in the Phantom wallet enabled the theft of over $500,000 in Wiener Doge (WIENER) tokens, despite Phantom marketing its security as “best-in-class.” According to the filing, the wallet lacked basic safeguards including transaction velocity checks, geolocation anomaly detection, and withdrawal limits.
The plaintiffs are seeking at least $3.1 million in damages and allege that Phantom violated the Commodity Exchange Act by operating as an unregistered trading platform while evading regulatory oversight. The suit also names OKX as a co-defendant, citing the exchange’s guilty plea to federal money laundering charges involving $5 billion in illicit transactions and arguing that Phantom’s failure to disclose its direct integration with OKX was deceptive.
Phantom has responded by claiming that as a noncustodial wallet, users bear sole responsibility for any losses.