Crypto Security Alert: Investors Blame Phantom, OKX for $500K Loss and Wiener Doge Token Collapse

A group of angry investors, led by attorney Liam Murphy, has taken legal action against Phantom Technologies and crypto exchange OKX. They claim that Phantom’s browser wallet had serious security flaws that led to the theft of over $500,000 in digital assets. What’s worse, this alleged breach caused Murphy’s own crypto project, Wiener Doge, to crash by 99%, wiping out millions in value overnight.

Alleged Security Flaw in Phantom’s Wallet

According to the lawsuit filed in the Southern District of New York, the problem began with how Phantom stored private keys. The filing says that Phantom kept users’ decrypted private keys in browser memory, making it easier for hackers to access wallets without needing passwords or security checks.

On January 20, cybercriminals reportedly exploited this flaw in Phantom’s browser extension. They gained access to Liam Murphy’s crypto wallet and stole assets worth over $500,000. What followed was the collapse of his meme coin project, Wiener Doge.

From $3 Million to Almost Zero

At its peak, Wiener Doge had a market value of more than $3 million, with tokens trading at around $3.10 each. But after the hack, the coin’s value dropped to less than one cent. That’s a staggering loss for anyone holding the token.

The attacker didn’t stop at just stealing the tokens. They used Phantom’s own built-in “Swapper” tool to convert the stolen funds into Solana (SOL), making it nearly impossible to recover. Murphy’s lawsuit claims that Phantom not only allowed this to happen but chose to remain silent about the risks.

Claims Against Phantom and OKX

The lawsuit makes seven major claims against Phantom, including:

• False advertising about wallet security
• Operating as an unregistered trading platform
• Negligence in protecting users from known risks
• Aiding money laundering through integrations with OKX

Murphy alleges that Phantom was aware of the issue but did nothing to warn users. The suit also accuses OKX of playing a role, stating that its integration enabled the hacker to swap the stolen tokens easily. According to the filing, if OKX hadn’t provided routing and execution services, the attacker wouldn’t have been able to liquidate the funds so quickly.

More Victims Join the Fight

It’s not just Liam Murphy who’s seeking justice. Thirteen more plaintiffs, including his friends and family, joined the lawsuit after losing their investments in Wiener Doge. Together, they are asking for damages worth $3.1 per lost token, based on the coin’s value before the breach.

This lawsuit is not only about recovering money. It also raises bigger questions about crypto wallet safety, transparency from tech companies, and the responsibilities of exchanges when things go wrong.

Final Thoughts

This story is a reminder that while crypto offers exciting opportunities, security and trust are everything. Users put faith in wallets like Phantom to protect their assets. If companies don’t take that seriously, the consequences, financial and legal, can affect the investor’s earnings.