CrowdStrike shareholders have filed a lawsuit against the cybersecurity firm following a faulty software update that caused millions of devices to fail worldwide.
The lawsuit, filed in Austin, Texas, accuses CrowdStrike of making “false and misleading” statements about its software testing procedures.
It claims the company's share price plummeted by a staggering 32% in the 12 days following the incident, resulting in a loss of $25 billion in market value.
Shareholders sue CrowdStrike after service outage
Those who owned shares between Nov. 29 and July 29 are seeking unspecified damages, alleging that executives defrauded investors by falsely assuring them that software updates had been thoroughly tested.
On March 5, CEO George Kurtz said the company’s software was “validated, tested and certified.”
A person from the company told the BBC“We believe this case is without merit and will vigorously defend the company.”
The problems stemmed from a bug in the system designed to ensure software updates worked properly, which allowed “problematic content data” in a file to go undetected.
On its ongoing incident reporting page, CrowdStrike stated that virtually all devices had been restored: “Using a weekly comparison, approximately 99% of Windows sensors were online as of July 29th at 5:00 pm PT, compared to before the content update. We typically see about a 1% week-to-week variation in sensor connections.”
The outage hit Delta Airlines particularly hard, losing around $500 million in revenue and passenger compensation. The company had to cancel more than 5,000 flights and manually restart 40,000 servers.
Delta CEO Ed Bastian has indicated that the airline will seek damages from CrowdStrike, saying, “We have no choice.” The company has reportedly enlisted the help of renowned attorney David Boies to seek damages from both CrowdStrike and Microsoft.
