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Coincheck Lawsuits Start to Mount as Exchange Reports to Regulators

judge gavel on computer with scales of justice on desk

Last month saw the biggest cryptocurrency theft in history when half a billion dollars worth of NEM was stolen from Japan’s Coincheck exchange. To prevent further unauthorised withdrawals Coincheck froze all exchange deposits. Now disgruntled traders are filing a lawsuit to get access to those funds.

A group of 10 cryptocurrency traders have filed a petition with Tokyo District Court, requesting the withdrawal of their assets to non-exchange wallets. According to their lawyer Hiromu Mochizuki, they may also bring a lawsuit to claim damages from the theft.

A source told Reuters that 30 billion yen (around $280 million) has been requested from the exchange in withdrawals. The exchange maintains that restrictions will stay in place until they are sure their services are secure. On Friday they announced that withdrawals in yen would be allowed as of today. It appears that this option is now in place. However, cryptocurrency withdrawals are still being prevented, though Bitcoin trading is still allowed on the exchange.

Coincheck is set to report to the Japanese Financial Services Agency (FSA) today on the hack. The FSA has demanded an explanation of the exchange’s systems and how they will stop any similar attacks in future. If satisfied that the exchange has raised its standards, the FSA may allow Coincheck an operating license to continue its business.

The hack has raised profound questions about Japan’s approach to cryptocurrency regulation compared to their much more cautious neighbours in China and South Korea. Though a regulatory framework was put in place last April, exchanges were permitted to continue their operations before receiving the official stamp of approval. 16 exchanges have been officially sanctioned so far, with 16 still in the pending stage. At the time of the attack, Coincheck was one of the pending exchanges.  

According to Taro Aso, Japan’s financial services minister, the FSA will be guided by the need to protect exchange customers. “Through our on-site inspections”, he said, “we will make sure that customers are protected”.

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