The litigation, spearheaded by Wolf Haldenstein Adler Freeman & Herz LLP, centers on allegations that Pheton’s stock price was artificially inflated through social media misinformation and impersonators posing as financial professionals. During the class period, the company's shares surged from an IPO price of $4.00 to a peak of $32.00 by July 28, 2025, despite a lack of legitimate corporate developments or business prospects to support such gains. Investigators point to fabricated rumors of an imminent acquisition by Gilead Sciences, Inc. as a primary driver of the buying frenzy.

The collapse occurred on July 29, 2025, when the stock plummeted 95% in a single session, falling from a market capitalization of $765 million to just $40.8 million. Trading was halted at least nine times throughout the day as the price cratered to $1.65. The complaint asserts that the company failed to disclose the risks associated with the promotional scheme and market manipulation. Investors who suffered losses and wish to participate in the legal action must contact the firm before the September 28 cutoff.