CrowdStrike, a cybersecurity firm, is facing a lawsuit from shareholders after a faulty software update caused chaos around the world by crashing more than eight million computers. The lawsuit alleges that the company made false and misleading statements about its software testing, leading to a 32% drop in share price and a loss in market value of $25 billion.
CrowdStrike has denied the allegations and stated that it will defend itself against the proposed class action lawsuit. The lawsuit, filed in the Austin, Texas federal court, accuses CrowdStrike executives of defrauding investors by falsely claiming that the company’s software updates were adequately tested.
The lawsuit is seeking compensation for investors who owned CrowdStrike shares between 29 November and 29 July. Delta Air Lines, one of the companies affected by the faulty update, has stated that the disruption caused by the outage cost the airline $500 million in lost revenue and compensation to passengers. Delta is reportedly preparing to seek compensation from CrowdStrike.
The faulty update on 19 July crashed 8.5 million Microsoft Windows computers worldwide, disrupting businesses and services such as airlines, banks, and hospitals. CrowdStrike has acknowledged a “bug” in the system designed to ensure software updates worked properly, which led to the problematic content data in a file going undetected.
The company has stated that it is implementing better software testing and checks to prevent a repeat of the incident, including increased scrutiny from developers. Despite the challenges, CrowdStrike remains confident in its ability to defend itself against the lawsuit and continue providing cybersecurity solutions to its clients.
