A group of high-net-worth investors from Russia and the Commonwealth of Independent States has launched a class action against Atomic Wallet following a $100 million heist that has left investors reeling. The legal action is being coordinated by German lawyer Max Gutbrod and Boris Feldman, a co-founder of Moscow firm Destra Legal.

Gutbrod, who was once a partner at Baker & McKenzie in Moscow for more than 20 years, has stated that a group of lawyers is currently representing 50 clients who lost a collective sum of $12 million following a breach at Atomic Wallet two months ago. He added that they are working towards recouping their clients’ assets and plan to file a class action lawsuit against Atomic Wallet. Gutbrod also alleged that the company failed to provide any information to their clients regarding the hack or report it to the police.

 Massive breach in security leads to unprecedented losses

Atomic Wallet, an app for managing cryptocurrency across various platforms, suffered a significant breach in early June. The Estonia-headquartered company, with over 5 million users, found that some or all of the crypto in their wallets had been removed. The losses included various cryptocurrencies such as Bitcoin (BTC), Ether (ETH), Tether (USDT), Dogecoin (DOGE), Litecoin (LTC), BNB, and polygon (MATIC). Over 5,500 wallets were compromised in the hack, with clients losing over $100 million worth of crypto.

The reason for the breach remains unclear, with Atomic Wallet not yet disclosing the specifics of its technical investigation. Some experts have pointed to potential flaws in the wallet’s design, such as insufficient randomness in the generation of recovery phrases, enabling hackers to “brute-force” their way into the wallets. Others have suggested the possibility of hackers deriving keys from transaction data or exploiting vulnerabilities in the wallet manufacturer’s infrastructure.

Atomic Wallet Faces Legal Battle as Questions Surround the Heist’s Perpetrators

Initially, the North Korean criminal gang Lazarus Group was blamed for the attack on Atomic Wallet. However, Feldman maintains that a Ukrainian group is more likely to have orchestrated the heist. Destra is working with blockchain analysis experts Match Systems to conduct an investigation on behalf of the investors, and traces of involvement of Ukrainian hacker groups have been found.

Atomic Wallet’s chief executive, Konstantin Gladych, has stated that the firm is cooperating with law enforcement agencies in Estonia and Kazakhstan. However, the company’s claim that “less than 0.1%” of app users were affected by the heist has been met with ridicule by many clients online.