Byte Federal Faces Lawsuit Over Massive Bitcoin ATM Data Breach

Byte Federal, a major player in the Bitcoin ATM and digital asset industry, is under fire for a data breach that exposed sensitive personal information of 58,000 individuals. A class action lawsuit claims the company failed to secure its computer network, leaving customers vulnerable to identity theft, fraud, and other long-term harm.

Users allege Byte Federal’s negligence enabled cybercriminals to infiltrate its systems, exfiltrate data, and put victims at ongoing risk, all while the company delayed notifying those affected.

Byte Federal Data Breach Exposed Sensitive Information, Lawsuit Claims

On November 18, 2024, Byte Federal detected unusual activity in its network—a clear sign of a data breach, according to the lawsuit. A forensic investigation revealed that cybercriminals had infiltrated the company’s systems, gaining access to files containing names, Social Security numbers, dates of birth, government-issued IDs, transaction data, and even user photographs.

Despite the sensitivity of this data, Byte Federal didn’t notify affected customers until weeks later. Stephanie Fischer, who filed the proposed class action lawsuit, received her notice letter on December 19, 2024—over a month after the breach was detected. She argues this delay not only heightened the risks but also reflected a broader failure in Byte Federal’s cybersecurity practices.

Consumers Accuse Byte Federal of Negligence and Delayed Notification

Fischer, a resident of Little Rock, Arkansas, says she trusted Byte Federal to keep her information safe. After learning her Social Security number and other personal details were compromised, Fischer has spent hours addressing the fallout, including researching identity theft protection, monitoring financial accounts, and taking other steps to mitigate the potential damage.

The lawsuit alleges Byte Federal’s negligence has left Fischer and thousands of others facing an imminent risk of identity theft. Fischer claims the breach has already resulted in diminished value of her personal information, stolen by cybercriminals who may sell it on the dark web.

She is calling Byte Federal’s cybersecurity measures “grossly negligent” and argues that the company failed to use even the most basic data protection standards, such as encryption.

Other Companies Face Similar Lawsuits Over Data Breaches

Data breaches are far from rare, and Byte Federal is accused of ignoring obvious risks. High-profile hacks and lawsuits—including a recent one filed against Deloitte after a cyberattack compromised the sensitive personal information of Rhode Island residents using the RIBridges system and one filed against Robinhood following a data breach that exposed sensitive customer information—have highlighted the need for robust cybersecurity practices. 

Experts emphasize that companies dealing with sensitive data, like Byte Federal, have an obligation to implement industry-standard measures to prevent breaches. Despite these risks, Fischer claims Byte Federal failed to encrypt sensitive data or detect the breach in a timely manner. She argues the company knew—or should have known—that their systems were vulnerable, especially given the surge of similar breaches across the financial and tech industries.

In her lawsuit, she wants to represent anyone in the country who was affected by the breach. She is suing for negligence, breach of implied contract, unjust enrichment, and injunctive relief. As well as damages and restitution, she is seeking significant improvements to Byte Federal’s data security systems and protocols, future annual audits, and company funded long-term credit monitoring services.

Case Details

• Lawsuit: Fischer v. Byte Federal, Inc.
• Case Number: 8:24-cv-03002-JLB-TGW 
• Court: U.S. District Court Middle District of Florida

Plaintiffs' Attorneys

• Jeff Ostrow (Kopelowitz Ostrow P.A.)
• A. Brooke Murphy (Murphy Law Firm)

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