A group of crypto users is taking legal action against Phantom Technologies, claiming the company’s wallet put their funds at risk due to poor security choices.
The lawsuit was filed on April 14 in New York’s Southern District by attorney Thomas Liam Murphy and 13 other plaintiffs. They said that Phantom’s design made it easy for hackers to steal from users without much effort.
One of the main claims is that Phantom stored users’ private keys in browser memory without any encryption. The suit pointed to an incident where a hacker reportedly got into a developer’s computer, copied the private key from the browser’s memory, and used it to take control of three Phantom wallets tied to that key.
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The attacker then used Phantom’s built-in “Swapper” tool to trade roughly $500,000 worth of Wiener Doge (WIENER) tokens for only about $37,500 in Solana
According to the complaint, the wallet did not have any checks in place to catch this kind of activity—no limits on how fast funds could be moved, no alerts for strange locations, and no warnings for large withdrawals.
Additionally, the group said Phantom broke financial rules by acting like a trading platform without being registered. They argued the company avoided regulation by calling itself decentralized while still offering services that look like trading.
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