Morrison Cohen Secures Arbitration and Dismissal of Claims Against Phantom Technologies in Digital Assets Dispute

On September 28, 2026, Morrison Cohen secured an order compelling arbitration of one plaintiff’s claims, and dismissal of the remaining plaintiffs’ claims, against its client, Phantom Technologies Inc., arising from the alleged theft of approximately $500,000 in digital assets from a cryptocurrency wallet.

Morrison Cohen represents Phantom Technologies in Murphy et al. v. Phantom Technologies Inc. et al., pending in the U.S. District Court for the Southern District of New York. The case arose from an alleged January 2025 hack involving the Wiener Doge meme coin project.

The plaintiff alleged that a hacker compromised his Phantom wallet and used Phantom’s swap feature to exchange approximately $500,000 in meme coins for approximately $37,000 worth of Solana before transferring the funds to other wallets. The plaintiff asserted claims against Phantom for alleged negligence and violations of the commodities laws, among other theories.

Morrison Cohen moved to compel arbitration based on Phantom’s Terms of Service. On September 28, 2026, Judge Margaret M. Garnett granted the motion, holding that the plaintiff had agreed to a valid and enforceable arbitration provision when he assented to Phantom’s Terms of Service.

The Court adopted Morrison Cohen’s arguments that the plaintiff had adequate notice of the Terms of Service and had affirmatively agreed to them when creating and using his Phantom wallet. The Court also rejected the plaintiff’s argument that a post-hack email to Phantom constituted an effective opt-out of arbitration, finding that the communication was both untimely and failed to satisfy the contractual opt-out requirements.

The Court further held that the remaining token-holder plaintiffs lacked standing to pursue their claims against Phantom. As the Court explained: “The token holder plaintiffs have not alleged that they downloaded, interacted with, or engaged with Phantom, or that they suffered an injury-in-fact as a result of the cyber hack that is fairly traceable to any legally protected interests or the actions of Phantom. All that the complaint alleges is that they received tokens from Murphy as a gift through some unspecified mechanism and that gift later declined in value.”

The Court concluded that the alleged losses therefore were not fairly traceable to any legally protected interest or action by Phantom. The case has been stayed pending arbitration.

The Morrison Cohen team was led by Jason Gottlieb, Daniel Isaacs, Will Roth and Emma McGrath.

The decision was covered by Law360 in the September 28, 2026 article, “Atty's Suit Over His Meme Coin Hack Sent to Arbitration,” available here for Law360 subscribers.