CrowdStrike Faces Lawsuit Over Global IT Outage

Cybersecurity firm CrowdStrike is being sued by some of its shareholders following last month’s global IT outage. Lawyers representing the shareholders allege that CrowdStrike defrauded investors by concealing flaws in its software testing.

The incident, which occurred on July 19, was triggered by a software update from CrowdStrike that caused over eight million computers to crash, disrupting operations for thousands of businesses worldwide, including airports, banks, hospitals, and broadcasters.

CrowdStrike CEO George Kurtz apologized for the disruption, attributing it to a “software bug” and acknowledging that it would take time to fully resolve the issues.

The lawsuit, filed in Austin, Texas, claims that the company’s assurances about its technology were materially false and misleading. It highlights that CrowdStrike’s share price plummeted 32% in the 12 days following the outage, resulting in a $25 billion (£19 billion) loss in market value.

The legal complaint references statements made by Kurtz during a March conference call, where he described the company’s software as “validated, tested and certified.”

A spokesperson for CrowdStrike, based in Texas, responded: “We believe this case lacks merit and we will vigorously defend the company.”

The lawsuit, led by the Plymouth County Retirement Association in Massachusetts, seeks unspecified damages for shareholders who held shares in the company between November 29 last year and July 29.

CrowdStrike may face additional lawsuits over the outage. Delta Air Lines is among those considering legal action. Delta’s CEO, Ed Bastian, stated that the outage cost his company approximately $500 million (£390 million) in lost revenue, compensation, and hotels for stranded passengers.

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