Phantom Wallet Sued for $3.1M Over Solana Meme Coin Hack

The Solana ecosystem is under fresh scrutiny as Phantom, its most popular self-custodial wallet, is being sued for $3.1 million. The lawsuit, filed April 14 in the Southern District of New York, alleges that Phantom’s design flaws led to a catastrophic hack involving the Wiener Doge (WIENER) meme coin.

Crypto attorney Liam Murphy—partner at Murphy’s Law—and 13 other plaintiffs claim Phantom failed to protect users from malware attacks, ultimately resulting in the collapse of the WIENER token project.

At the center of the lawsuit: a cyberattack on Murphy’s personal computer, where a hacker exported private keys directly from unencrypted browser memory used by the Phantom extension. This allowed the attacker to drain three linked wallets, despite multi-factor authentication being active.

Phantom’s Response: “Not Our Responsibility”

Phantom has rejected any liability, maintaining that it’s a noncustodial wallet and that users have full control—and thus full responsibility—for their funds. Their statement emphasizes:

• Users hold their own keys.
• Phantom can’t prevent scams or malware attacks.
• In-app resources are available to educate users on security.

But critics argue that Phantom’s design choices—like storing private keys in browser memory—left users exposed to exactly this kind of vulnerability.

WIENER Meme Coin Destroyed

This wasn’t just a personal loss. The hack led to the mass liquidation of WIENER tokens, causing the meme coin’s value to crash from $3.15 million in market cap to just $12,750. The lawsuit alleges the hacker used Phantom’s built-in Swapper feature to trade $500,000 worth of WIENER for just $37,537 in SOL, effectively tanking the project.

Despite the crash, WIENER still sees surprising activity—with $300,000 in daily trading volume and over 2,400 recent transactions, according to GeckoTerminal.

The Bigger Picture: Solana’s Ecosystem Under Pressure

This lawsuit adds to Solana’s recent struggles. First, the popular Pump.fun meme token launchpad has been caught in negative headlines over questionable launches and low security standards. Now, Phantom Wallet, a cornerstone of Solana’s DeFi infrastructure, is facing serious allegations of negligence.

Plaintiffs’ Claims:

• Phantom failed to implement transaction velocity checks or geo-anomaly monitoring.
• It didn’t include withdrawal limits or other safeguards seen in centralized wallets like Coinbase.
• Phantom’s integration with OKX, which has pleaded guilty to money laundering violations, was not disclosed transparently.

The lawsuit claims Phantom violated the Commodity Exchange Act by acting as an unregistered trading platform under the guise of decentralization.

Legal Stakes: What Phantom Could Face

• $3.1 million in damages—representing WIENER’s market cap before the hack.
• Potential class-action escalation if more users report similar vulnerabilities.
• Regulatory attention for failing to implement or disclose standard security practices.

This case could set a new legal precedent for noncustodial wallet liability, especially if the court finds Phantom’s design choices materially contributed to the loss.

Solaxy: Solana’s Hope Amidst Chaos?

In light of these issues, a new contender is gaining momentum: Solaxy (SOLX)—a Layer-2 solution designed to tackle Solana’s persistent network congestion and reliability issues.

Solaxy is currently in presale and has already raised over $30 million, signaling strong community and investor support.

Key Features:

• Batches transactions off-chain before finalizing them on Solana mainnet.
• Reduces congestion while maintaining Solana’s blazing speed.
• Offers a dedicated native token (SOLX) for governance and staking.

If successful, Solaxy could become Solana’s answer to Ethereum’s Arbitrum and Optimism—but with fewer scaling headaches and a meme-friendly infrastructure.

DEX Volume Still Dominates

Despite the Phantom fallout, Solana continues to dominate in decentralized exchange volume, according to DeFiLlama:

• $2.5 billion in daily volume, topping Ethereum’s $1.8 billion.
• Home to top meme tokens and high-frequency trading activity.

But with major infrastructure players like Phantom and Pump.fun under fire, will developers and retail users stick around?

What’s Next?

1. Court Proceedings: If the court finds Phantom’s architecture negligent, this could redefine liability for noncustodial wallets.
2. Security Audits: Expect Phantom and similar wallets to tighten up security or face market backlash.
3. Rise of L2s: Projects like Solaxy might become essential for keeping Solana alive in a world increasingly focused on UX and security.

Final Thoughts: Is Solana in Trouble?

The Phantom lawsuit is more than just a one-off story—it’s a warning. Infrastructure matters, and when wallets holding $25 billion in assets fail to secure their users, trust in the entire blockchain starts to crumble.

But Solana isn’t out yet. It still leads in user activity and DEX volume, and if Solaxy or another L2 can deliver—and wallets like Phantom rebuild trust—there’s a path to redemption.

For now, though, all eyes are on the courtrooms, code reviews, and the next big layer-2 breakout.

Would you like a follow-up post on Solaxy’s Layer-2 architecture or a deep dive into wallet security practices in crypto?