Kroll Sued Over Alleged Mishandling of FTX Creditors' Data

By: Isha Das

In a significant development concerning the fallout of the FTX bankruptcy, creditors of the defunct cryptocurrency exchange have filed a class action lawsuit against Kroll Restructuring Administration. The lawsuit, initiated by Hall Attorneys, stems from accusations that Kroll failed to adequately safeguard sensitive creditor information, leading to a data breach that compromised the personal details of investors associated with FTX, BlockFi, and Genesis.

This class action, filed in a US district court, alleges Kroll's negligence in handling sensitive information allowed malicious actors to access the data. This has reportedly led to various phishing attacks on creditors. The breach, which occurred in August 2023, enabled the perpetrators to obtain names, addresses, and even account balances of affected individuals. The continual reliance on emails for communication by Kroll, even after the breach, has been criticized for leaving users susceptible to further cyber threats.

Lead counsel Nicholas Hall has invited all affected creditors to join the lawsuit, which demands reforms and monetary compensation for those impacted by the breach. The plaintiffs are seeking changes to Kroll’s operational protocols, emphasizing the need for multi-channel communication, strengthened security measures, and independent audits to ensure better data protection in the future. Financial claims are also being pursued, with the possibility of monetary relief for eligible claimants.

The situation highlights ongoing concerns in the digital asset sector regarding data security and the handling of financial information in bankruptcy proceedings. The outcome of this lawsuit could have significant implications not only for the affected creditors but also for how sensitive data is managed in future insolvency cases involving cryptocurrency companies.