- Phantom Technologies and OKX have been sued over alleged security failures and fraud
- The lead plaintiff claims that the Phantom browser extension was hacked, leading to a $1 million loss
- The complaint alleges Phantom ignored known vulnerabilities and profited from criminal transactions routed through its platform
A federal lawsuit filed in the Southern District of New York accuses crypto wallet Phantom Technologies and its trading partner OKX of enabling a massive cyber theft that wiped out over $1 million in digital assets. The plaintiffs, led by attorney Thomas Liam Murphy, say Phantom misled users about its security, failed to warn of known browser vulnerabilities, and facilitated criminal transactions for profit. The case comes in the wake of OKX’s own guilty plea to federal money laundering charges.
Wiener Doge Private Keys Stolen
Murphy, the creator of the Solana-based meme coin “Wiener Doge,” alleges that on January 20, 2025, a hacker used malware to extract his decrypted private keys from Phantom’s browser extension. Within minutes, the hacker liquidated over $500,000 of tokens via Phantom’s built-in “Swapper,” converting them through OKX infrastructure. “The dramatic, unauthorized liquidation of Liam’s tokens caused colossal damage,” the complaint states, adding that the coin’s market cap plunged from $3.1 million to virtually zero overnight.
The complaint notes that Phantom “did not merely fail to anticipate cyberattacks—it knew exactly how users were being compromised and made a calculated decision to remain silent.” It also claims Phantom failed to notify users or regulators of similar past incidents, despite “hundreds of online complaints.”
Regulatory Avoidance and “Best-in-Class” Promises
In the lawsuit, Phantom is portrayed not as a wallet but as an unregistered trading platform, operating outside federal oversight. The lawsuit states Phantom processed $20 billion in swaps and collected $130 million in fees in January 2025 alone, all while “marketing itself as secure and user-friendly.” Murphy alleges this was deceptive: “Phantom’s marketing promised protection; its architecture delivered exposure.”
The lawsuit ties Phantom’s rise to its partnership with OKX, noting that the crypto exchange had pleaded guilty just two months earlier to operating an unlicensed money-transmitting business. Plaintiffs argue that both companies knowingly enabled anonymous criminal trading while profiting from transaction fees. “Phantom profits from each one—whether legitimate or criminal,” the complaint alleges.
Unlike simple hack-loss claims, this case could become a landmark in how courts treat crypto wallets that double as trading platforms—and the responsibilities they bear to their users.
