Phantom is facing legal heat after a group of plaintiffs alleged that a security vulnerability in the platform allowed hackers to siphon over $500,000 worth of Wiener Doge memecoins.
The lawsuit, filed in New York by attorney and Wiener Doge creator Thomas Liam Murphy alongside 13 others, accuses Phantom of negligence, fraud, and deceptive business practices. According to the filing, attackers exploited a flaw in Phantom’s browser extension that exposed private keys stored in memory—an issue the company was allegedly aware of but failed to address or disclose.
Once the private key was compromised, the hacker swiftly drained three Phantom wallets, bypassing two-factor authentication entirely. The stolen assets were funnelled through Phantom’s in-app “Swapper” feature and converted into Solana (SOL) via OKX’s smart contract routing.
The attack decimated the value of Wiener Doge, a Solana-based meme token that peaked at over $1 million in market cap before the exploit. Following the hack, the token’s price plunged to less than a cent per coin.
The plaintiffs claim Phantom prioritized transaction fees over user safety, processing billions of swaps and acting as an unregistered trading platform rather than just a crypto wallet. They further allege that OKX, which facilitated the token swaps, shares responsibility for the damages due to its past involvement in money laundering-related violations. OKX has been named as a co-defendant in the case.
Phantom has yet to issue a public response to the allegations.
Phantom has seen meteoric growth in the past year, attracting over 15 million active users and facilitating more than $20 billion in token swaps in 2024 alone, according to a February CoinMarketCap report. The company raised $150 million in a Series C funding round in January at a $3 billion valuation. It has also expanded its reach by integrating support for fast-rising networks like Sui and Base.
Additionally, in February, scammers adopted a new phishing tactic targeting Phantom Wallet users by using deceptive pop-ups that appear legitimate update requests.
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