Kroll faces class-action lawsuit over FTX creditor data breach and phishing claims

Kroll, a financial advisory firm overseeing claims in the FTX bankruptcy process, is now facing a class-action lawsuit after creditors accused the company of failing to protect their personal data, which was allegedly used in a series of phishing attacks [1]. The lawsuit, filed in a U.S. district court by Hall Attorneys on behalf of Jacob Repko and other affected creditors, claims that Kroll’s reliance on email-based communication and its data management processes were insufficient to prevent the breach [2].

The data breach reportedly occurred in August 2023, when a Kroll employee’s account was compromised through a SIM-swapping attack. This led to the exposure of sensitive creditor information, which was then exploited in phishing campaigns targeting FTX, BlockFi, and Genesis creditors. The emails, often tailored to appear legitimate, have been received daily by many creditors, leading to further financial and reputational harm [3].

Sunil Kavuri, a prominent FTX creditor, shared screenshots showing that he had been targeted by phishing emails multiple times since August. He also noted that other creditors have reported similar experiences, indicating a widespread issue [4]. The lawsuit argues that Kroll’s failure to implement more secure communication methods contributed to the vulnerability of creditors and the subsequent financial losses.

The legal action seeks not only monetary compensation for affected individuals but also operational changes to Kroll’s claims-handling procedures to prevent further breaches. Nicholas Hall, an attorney with Hall Attorneys, suggested that eligible participants might receive financial redress depending on the court’s ruling. The firm also maintains the FTX Claims website, which assists creditors in navigating the complex claims process [5].

This is not the first data incident involving Kroll. In March 2024, the firm reportedly suffered another breach, in which attackers gained access to client invoicing, accounts payable, and email addresses [6]. These incidents have raised concerns about the adequacy of cybersecurity measures in handling sensitive data during crypto-related bankruptcy proceedings.

The ongoing legal and security challenges highlight the complexities of managing digital asset claims in an evolving regulatory landscape. If the lawsuit is successful, it may establish a precedent for liability in crypto claims management, potentially prompting firms to reassess their data security protocols and risk frameworks [7].

The third round of FTX creditor reimbursements is scheduled to begin on September 30, with $1.9 billion set to be distributed. However, foreign creditors, including those from restricted countries, are likely to be excluded from the payout [8]. The second round of reimbursements, which totaled over $5 billion, was distributed in May, and earlier this year, FTX outlined plans to allocate $1.2 billion to users with claims up to $50,000 [9].

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[1] BTCUSD - Kroll faces class-action suit as FTX creditors allege ... (https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96687529/kroll-faces-class-action-suit-as-ftx-creditors-all)

[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?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)

[3] Memory Corruption and Sandbox Escape Vulnerabilities ... (https://www.varutra.com/ctp/threatpost/postDetails/Memory-Corruption-and-Sandbox-Escape-Vulnerabilities-Addressed-in-Firefox-142/UEtkc1FRT2FmdmNBanNiaHVXQnRIUT09/)