FTX Victims Sue Kroll: Email Fails, Data Leaks, and Phishing Plague Claimants

FTX creditors have initiated a class-action lawsuit against Kroll Restructuring Administration, the firm overseeing claims processing for the bankrupt cryptocurrency exchange. The suit, filed on August 20, 2025, alleges that Kroll’s handling of claims for FTX, as well as related entities BlockFi and Genesis, resulted in financial harm to creditors and the exposure of sensitive data to cybercriminals [1]. The lawsuit, led by attorney Nicholas Hall, claims that Kroll failed to implement adequate security measures despite having prior warnings about phishing risks following a data breach in August 2023 [4].

The 2023 breach reportedly occurred when hackers gained unauthorized access to a Kroll employee’s mobile number, which provided entry into the firm’s cloud-based systems. As a result, creditors’ personal information—including names, addresses, email contacts, and FTX account balances—was compromised [3]. Despite this, Kroll continued to rely exclusively on email communication for critical notices, leaving claimants exposed to phishing attacks and scams. This method, according to the lawsuit, significantly increased the vulnerability of creditors to cyber threats [1].

FTX creditor and community advocate Sunil Kavuri confirmed that phishing emails have become a daily concern for users of the defunct exchange. He shared an instance where he received a fraudulent email with his full name just hours before he posted about the issue [4]. The lawsuit argues that Kroll’s email-only approach not only failed to protect creditors but also led to verification delays, account lockouts, and, in some cases, the loss of claims [4].

The legal action seeks both financial compensation for losses incurred through phishing attacks and delayed claims, as well as systemic reforms to Kroll’s claim management processes. These include multi-channel communication strategies using both email and traditional mail, mandatory response periods for status changes, and the implementation of manual tax-form upload options independent of KYC verification. The plaintiffs also demand stricter security controls for account modifications and independent audits of Kroll’s data protection and claim-handling procedures [3]. Nicholas Hall emphasized that these changes are necessary to prevent future incidents and to restore trust among creditors.

The lawsuit also highlights concerns about the reliability of the claims portal, with some creditors reporting difficulties in submitting required tax forms and experiencing verification status fluctuations between “Verified” and “Hold.” These issues have added to the frustration and uncertainty for claimants seeking to recover their funds [3]. The third round of FTX reimbursements, totaling $1.9 billion, is scheduled for September 30, 2025, and will be distributed through BitGo, Kraken, and Payoneer. However, experts have warned that scammers may attempt to exploit users during this period, underscoring the urgency of the legal action [3].

The potential outcomes of the lawsuit include financial compensation for eligible creditors, operational reforms at Kroll, and enhanced security measures to prevent future data breaches. Nicholas Hall noted that eligible class members could receive monetary relief, including up to $750 for California victims, though the exact amounts will depend on court rulings and residency status [4]. The legal battle also represents a broader concern within the cryptocurrency industry about the management of sensitive data during bankruptcy proceedings and the need for robust safeguards to protect creditors from cyber threats.

Source: [1] FTX creditors sue Kroll for mishandling claims, exposing sensitive data (https://cryptoslate.com/ftx-creditors-sue-kroll-for-mishandling-claims-exposing-sensitive-data/) [2] Kroll faces class-action suit as FTX creditors allege daily scam emails (https://cointelegraph.com/news/kroll-class-action-ftx-creditors-complain-daily-scam-emails) [3] FTX Creditors Launch Legal Battle Against Kroll for Mishandling Claims (https://coingape.com/trending/ftx-creditors-launch-legal-battle-against-kroll-for-mishandling-claims/) [4] FTX creditors sue Kroll for mishandling claims, exposing sensitive data (https://cryptoslate.com/ftx-creditors-sue-kroll-for-mishandling-claims-exposing-sensitive-data/)