- Russian litigants claim Atomic Wallet failed to update users and report the hack to authorities.
- Atomic Wallet now faces two class action lawsuits following a June filing in the US District Court.
- The wallet’s point of weakness remains a mystery.
The lack of secure crypto custody options remains a barrier to mass adoption. Instead of holding one’s digital assets on an exchange, self-custody is often touted as the most secure approach. However, as demonstrated by the recent Atomic Wallet hack, self-custodying crypto remains a precarious affair.
In a now-deleted tweet dated June 3rd, Atomic Wallet said it was investigating multiple reports of hacked wallets. Weeks later, a $100 million class action lawsuit was filed against the company in the US District Court of Colorado on the grounds of negligence and unlawful conduct. In a further twist, affected Russian users are preparing to file another class action against the company.
Russian Investors Seek Justice
Around 50 high net-worth individuals from Russia and the surrounding Commonwealth of Independent States (CIS), who lost a collective US$12 million in the hack, are preparing to file a class action lawsuit against Atomic Wallet, according to bne IntelliNews.
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Legal experts Max Gutbrod and Boris Feldman represent the users, who told bne IntelliNews that they are working to recover the stolen funds on behalf of their clients. Gutbrod slammed Atomic Wallet over its lack of updates on the matter, adding that the firm did not report the incident to authorities.
Atomic Wallet Exploit Remains a Mystery
At the time of the hack, Atomic Wallet was heavily criticized for being slow to give updates. Affected users vented their anger in a non-deleted Reddit post titled “Several Days gone…Since 24 hours…there is no major update from Atomic wallet. What is really happening?” The most upvoted comment read:
“Seriously the lack of update for the scale of this hack is appalling. Being robbed because of the app security flaw and not by one's carelessness is intolerable…”
Atomic Wallet’s most recent tweet on the matter was posted on July 6th, which summarized a statement given on June 20th. The statement spoke of working to log reports and cooperating with on-chain intelligence firms and authorities. It also shortlisted four possible explanations for the exploit as: “virus targeting on local users devices, infrastructure breach, malware code injection, or a man-in-the-middle attack.”
On the Flipside
- Self-custody gives users full control of their crypto assets and circumvents loss in centralized exchanges going bankrupt.
- Lawsuits may discourage crypto startups from participating in the space.
Why This Matters
The exploits have raised questions as to the true security of self-custody wallets and have dampened enthusiasm for crypto being the future of finance in retail and institutional spaces.
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Read more on claims the Lazarus Group was behind the Atomic Wallet hack:
Atomic Wallet Hack: Is North Korea Behind It?
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Mumbai-Based CoinDCX Exchange Cuts Staff as Crypto Winter Bites Harder
