FTX Creditors Sue Kroll, Blame Weak Security for Phishing Fallout

FTX creditors have initiated a class-action lawsuit against Kroll Restructuring Administration, alleging negligence in handling sensitive data and contributing to phishing attacks following a 2023 data breach. The lawsuit, filed on August 20 by Hall Attorneys on behalf of FTX customer Jacob Repko and other affected creditors, highlights ongoing issues arising from the breach, which exposed names, addresses, email contacts, and FTX account balances. The breach reportedly occurred when a Kroll employee's mobile number was compromised, allowing hackers access to internal cloud-based systems [5].

The plaintiffs claim that Kroll's reliance on email-only communication for all creditor-related notices left claimants vulnerable to scams and phishing attempts. This method, they argue, failed to provide adequate protection to creditors, despite Kroll’s prior acknowledgment of phishing risks. The lawsuit further states that Kroll’s handling of claims led to verification delays, lockouts, and the loss of claims in certain instances [5]. Prominent FTX creditor Sunil Kavuri shared screenshots of phishing emails using his personal information, which have become a daily concern for affected users. Kavuri’s experience is not isolated, as other creditors have reported similar incidents [4].

The legal action seeks not only financial compensation for damages caused by phishing attacks and delayed claims but also operational reforms to improve security and communication. These reforms include multi-channel notifications via both email and physical mail, mandatory status-change notifications with cure periods, and the option for creditors to manually upload tax forms without KYC restrictions. The plaintiffs also demand stronger security protocols, such as mailed verification codes for account updates, and independent audits of Kroll’s data management practices [5]. Nicholas Hall, lead counsel for the case, emphasized the potential for monetary relief for eligible class members and the possibility of structural changes at Kroll to prevent future incidents [4].

The lawsuit coincides with the third round of FTX creditor reimbursements, set for September 30, 2025, with $1.9 billion to be distributed via BitGo, Kraken, and Payoneer. However, foreign creditors, including those in China and Russia, remain excluded from these payments. Despite ongoing disbursements, phishing attacks continue to undermine creditor trust in the claims process. The outcome of the case could set a precedent for how firms like Kroll manage sensitive data in restructuring contexts [4].

The case has drawn attention from the broader cryptocurrency community, with the official FTX Digital Markets Liquidators warning creditors of the increasing frequency of phishing scams impersonating the FTX claims portal. These scams often include malicious links or fraudulent websites designed to extract personal information from unsuspecting users [6]. The plaintiffs argue that Kroll’s current approach to claim management fails to adequately protect creditors, particularly in light of the known risks and repeated incidents [5].

Kroll has not yet issued a public response to the lawsuit. The company previously notified creditors of the 2023 breach, stating that no FTX passwords or digital assets were compromised. However, the firm acknowledged the potential for phishing attacks and urged creditors to remain vigilant [7]. Critics argue that the repeated breaches, including a March 2025 incident involving compromised email addresses, reflect a broader pattern of inadequate internal controls [4]. The legal battle may ultimately determine the extent of Kroll’s liability and reshape the standards for managing creditor data in similar high-profile restructuring cases.

Source: [1] title1 (https://www.sunnova.com/lp/financialrestructuring) [2] title2 (https://restructuring.ra.kroll.com/RiteAid2025/Home-DocketInfo) [3] title3 (https://restructuring.ra.kroll.com/23andMe/Home-DocketInfo?DockRelatedSearchValue=901919-1130) [4] title4 (https://coincentral.com/kroll-faces-lawsuit-as-ftx-creditors-report-nonstop-scam-emails-daily/) [5] title5 (https://cryptoslate.com/ftx-creditors-sue-kroll-for-mishandling-claims-exposing-sensitive-data/) [6] title6 (https://coingape.com/trending/ftx-creditors-launch-legal-battle-against-kroll-for-mishandling-claims/) [7] title7 (https://www.mitrade.com/insights/news/live-news/article-3-1061333-20250822)