• Phantom's iOS update locked out users, leaving some unable to access funds, sparking security concerns.

  • Non-custodial wallets like Phantom offer control, but users must secure recovery phrases to prevent loss.

  • Phantom responds to lockout issues, urging iOS users to back up recovery phrases and contact support.

Phantom crypto wallet iOS users reported sudden issues following an app update yesterday. This update triggered unexpected “app resets,” automatically logging users out and requiring them to re-enter their recovery phrases. 

https://twitter.com/iwinn_trades/status/1856557478382633122

Many users, unprepared for this prompt, lost access to their accounts and funds. Social media posts have revealed losses ranging from $10,000 to $600,000. This has sparked widespread concern and demands for reimbursement.

Non-Custodial Wallet Responsibility

Phantom operates as a non-custodial wallet. This means that it does not store user recovery phrases or hold access to funds. This setup gives users control but requires them to secure their own recovery phrases. 

Phantom initially indicated that the problem affected all users but later clarified that only a small number of iOS users were impacted. They urged users to back up their recovery phrases and contact support for additional help if needed.

Phantom’s Response to Incident

In response, Phantom quickly pushed out a new update aimed at preventing similar lockouts. They assured users that the update would stop the bug from impacting any additional accounts. 

https://twitter.com/phantom/status/1856796137665245455

Despite user requests, Phantom declined to disclose the exact number of affected users, instead reaffirming their commitment to making sure this type of issue does not occur again. They issued an apology for the disruption and encouraged users to reach out for support if necessary.

Previous Outage During Grass Token Airdrop

This incident comes after another recent issue during the Grass token airdrop event in late October. During this airdrop, Phantom experienced nearly three hours of downtime as a surge in user activity caused backend strain. Many users reported inaccurate balances and transaction issues. Phantom attributed the downtime to heightened demand on its servers.

Growing Concerns Over Seed Phrase Security

This incident highlights increasing concerns in the crypto community over the security of seed phrases. Some wallet providers, such as Ledger, have introduced paid recovery services to help users manage these phrases. However, privacy concerns remain, as some users worry about the risks of sharing sensitive information. In contrast, the DeRec Alliance is developing a decentralized recovery approach that divides secret data among trusted entities, aiming to protect user privacy.

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