Phantom Wallet Update Flaw: Users Lose Access and Funds

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by Giorgi Kostiuk

2 years ago

Phantom wallet, operating on the Solana blockchain, faced an update issue, causing some users to lose access to their funds.

Phantom Wallet Update Issue

On November 13, several users reported a bug in the new Phantom wallet update, which completely reset the wallet and required users to log in again using their recovery phrases. This bug caught many off guard, leading to the loss of access to their funds.

Impact on Users

One user claimed losses of $600,000, while others reported losing amounts between $10,000 and $100,000, sparking calls for reimbursement. However, as a non-custodial wallet, Phantom doesn't store recovery phrases or have access to user funds. Initially, it was believed the bug affected all users, but it was later confirmed to affect only a small number of iOS users. Phantom released a new update to prevent further spread of the bug.

Seed Phrase Recovery Services

Losing or improperly storing recovery phrases has always been an issue among less tech-savvy crypto users, leading to the development of recovery services akin to traditional financial solutions. For instance, hardware wallet maker Ledger launched its controversial Ledger Recover service in 2023, offering a secure backup solution. However, privacy concerns have arisen within the community regarding access to sensitive information.

The incident with Phantom wallet highlights the importance of securely storing recovery phrases and continuously working towards enhancing wallet security. Users must safeguard their data to avoid loss.

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