CrowdStrike sued by shareholders over worldwide software outage

CrowdStrike has been sued by shareholders who alleged the cybersecurity company of defrauding them. In a proposed class action filed in the Austin, Texas federal court, shareholders said CrowdStrike concealed how its inadequate software testing could cause the July 19 global outage that crashed more than 8 million computers. CrowdStrike's share price fell 32% over the next 12 days, wiping out $25 billion of market value.

As the outage's effects became known, Chief Executive George Kurtz was called to testify to the U.S. Congress. Delta Air Lines reportedly hired prominent lawyer David Boies to seek damages.

According to the shareholders, CrowdStrike's assurances about its technology were materially false and misleading when a flawed software update disrupted airlines, banks, hospitals and emergency lines around the world.

The complaint cites statements including from a March 5 conference call where Kurtz characterised CrowdStrike's software as "validated, tested and certified."

In a statement on Wednesday, Austin-based CrowdStrike said, “We believe this case lacks merit and we will vigorously defend the company.”