Shareholders are taking legal action against CrowdStrike, alleging that a problematic software update from the cybersecurity company led to a massive disruption affecting over eight million computers globally.
The lawsuit contends that CrowdStrike misled investors with “false and deceptive” claims about the robustness of its software testing processes.
It further claims that the company’s stock plummeted by 32% in the 12 days following the software malfunction, resulting in a staggering $25 billion (£14.5 billion) drop in market value.
CrowdStrike refutes these claims and plans to contest the class action lawsuit.
In response to the crisis, the company has announced that the widespread IT outage has been resolved. By 5 p.m. local time on Monday, July 29 (00:00 Tuesday GMT), the company reported that the systems affected by the outage had been restored—ten days after the issue first arose.
The legal action, filed in a federal court in Austin, Texas, accuses CrowdStrike executives of deceiving investors by presenting their software updates as thoroughly tested and reliable.
The lawsuit seeks compensation for investors who held CrowdStrike shares between November 29 and July 29.
It references a statement made by CEO George Kurtz on March 5, where he asserted that the company’s software had been “validated, tested, and certified.”
CrowdStrike has countered these allegations, with a spokesperson asserting, “We believe this lawsuit is without merit, and we will defend the company vigorously.”
