Phantom Wallet iOS Update Error Results in User Fund Access Problems

TLDR

• Phantom wallet iOS update bug caused some users to lose access to funds
• One user claimed $600,000 loss, others reported losses between $10,000-$100,000
• Bug affected “small number of iOS users” and new update prevents further issues
• Phantom is non-custodial – cannot directly help users recover funds
• Incident follows October downtime during GRASS token airdrop

A technical malfunction in the latest Phantom wallet iOS update has resulted in some users losing access to their cryptocurrency funds.

The incident, which began on November 13, 2024, has affected what Phantom describes as a “small number of iOS users,” though the exact count remains undisclosed.

Looks like an update just permanently locked up assload of liquidity on Phantom wallets. What a natural burn event lol https://t.co/jWeDE87SFT

— 🦄 IWinn🦄 (@iwinn_trades) November 13, 2024

The problem emerged when the new update unexpectedly reset users’ wallets, requiring them to log back in using their recovery phrases.

Many users, caught off guard by this sudden reset, found themselves unable to access their funds, as they hadn’t properly stored their recovery phrases.

Reports of losses have varied in scale, with one user claiming to have lost access to $600,000 worth of cryptocurrency.

Other affected users have reported losses ranging from $10,000 to $100,000, prompting calls for compensation from the wallet provider.

i just lost my wallet holding $600K,. this is my life's worth/savings

when i'm i getting my reimbursements?,.. i need to degen ASAP

— ebukaar🎭 (@ebukaarcryppted) November 13, 2024

Phantom operates as a non-custodial wallet, which means it doesn’t store users’ recovery phrases or have direct access to their funds.

This setup gives users complete control over their assets but also places the responsibility of securing recovery phrases entirely in their hands.

The company has responded to the situation by quickly pushing out a new update to prevent the bug from affecting additional users.

Phantom has also issued an apology to affected users and encouraged them to contact their support team for assistance.

In their post-incident announcement, Phantom emphasized their commitment to preventing similar issues in the future.

The company stated, “We’re committed to making sure this won’t happen again,” though specific details about preventive measures weren’t provided.

This isn’t the first technical issue Phantom has faced in recent months. In late October, the wallet experienced almost three hours of downtime during the Grass token airdrop.

During that incident, users reported seeing incorrect balances and experiencing problems with transactions, which Phantom attributed to backend strain from high user demand.

The latest incident has highlighted the ongoing challenges users face in managing recovery phrases, which are essential for accessing non-custodial wallets.

These phrases serve as the ultimate backup for accessing cryptocurrency funds, and losing them effectively means losing access to all assets stored in the wallet.

The crypto industry has been working to address these challenges. In 2023, hardware wallet manufacturer Ledger introduced its Ledger Recover service, a paid subscription option offering users a secure seed backup solution. However, this service has faced criticism from community members who worry about privacy implications.

Alternative solutions are being developed by organizations like the DeRec Alliance, which is working to create open standards for secure recovery through a decentralized approach. Their protocol aims to share essential information among designated entities without compromising private data.

For users affected by the current Phantom wallet issue, the company has set up dedicated support channels. Phantom’s support team is working to assist users who have been impacted by the update glitch, though their ability to help is limited by the non-custodial nature of the wallet.

The timing of this incident coincides with a period of increased activity in the Solana ecosystem, where Phantom serves as one of the primary wallet providers. The wallet has established itself as a key player in the Solana blockchain space, making any technical issues particularly impactful for users.

Some affected users have taken to social media platforms to share their experiences and seek solutions. The community response has included both expressions of support and criticism of the wallet’s update testing procedures.

Phantom has advised all users to ensure they have properly backed up their recovery phrases as a precautionary measure. This recommendation applies not just to those affected by the current issue but to all wallet users as a standard security practice.

The company continues to monitor the situation and has maintained regular communication with users through their official channels. They have not indicated any timeline for potential resolution for users who have lost access to their funds.