Coincheck Customers Withdraw $372 Million In Fiat, Others Sue To Withdraw Crypto Holdings

On the first day that the cryptocurrency exchange Coincheck allowed its customers to withdraw fiat money from the platform since a major theft last month, users took out a staggering sum of over 40 billion yen. Others, frustrated with their inability to access their virtual currency holdings on the online marketplace, are planning a lawsuit.

  • On February 13, Japanese cryptocurrency exchange Coincheck began allowing users to withdraw fiat money from the platform for the first time since its operators suspended all forms of withdrawals following a massive theft of 523 million NEM tokens.

    In a statement on the exchange‘s website, the company revealed that within the first day that the service was restored, customers had withdrawn about 40.1 billion yen, worth over $372 million at press time.

    Another announcement, which the company published four days prior, specified that the reinstatement of withdrawals should not be confused with an attempt to reimburse the customers affected by the heist, who, Coincheck said at an earlier date, will receive just over 88.5 yen for each token stolen from them.

    The exchange plans to allow the withdrawal of cryptocurrencies “as soon as we are able to guarantee the secure resumption of operations for each feature.”

    At an informal nighttime press conference on February 13, Coincheck COO Yusuke Otsuka reportedly said that these withdrawals would only take place after the holders of stolen NEM tokens had been reimbursed. A refund date would be announced soon, he related. In addition, he told those assembled that the company is considering capital alliances with other exchanges.

    It has also emerged that ten of the exchange‘s customers are preparing to sue the exchange for the ability to withdraw their cryptocurrency holdings from the platform. The lawyer representing the group, Hiromu Mochizuki, said that they may file a second suit in a bid to claim damages over the heist.

    In another February 13 development, Coincheck announced that it submitted a report to Japan’s Financial Services Agency (FSA). As the government body had requested, the document apparently describes details of the theft; the company’s security measures and the improvements that it has made to them over the past couple weeks; and other measures that it plans to adopt.

    When calling for the report, the regulator also ordered the implementation of various “risk management” measures to prevent another similar robbery, and according to the company’s statement, it has begun “making meaningful improvements to our system.”

    Since the heist, the FSA, the rules of which had allowed Coincheck to operate at the time of the theft because the exchange had applied for a license, appears to have kicked its operations into high gear, in part by conducting inspections of cryptocurrency exchanges.

    Additionally, the agency formally issued a warning the Macau-based Blockchain Laboratory Ltd. to stop offering cryptocurrency exchange services in the country, at least until it had registered with the FSA. The firm ostensibly hosts investment seminars, but under the belief that these seminars are intended to lure individuals into investing in ICOs, the agency classified the company as a cryptocurrency exchange.

    This is the first such action that the FSA has taken since April 2017, when the law changed to require that cryptocurrency services register with the regulator in order to operate legitimately. Before publishing the official warning on its website, the agency had, to no avail, informally warned Blockchain Laboratory to cease these activities on several occasions. If the company fails to heed this communiqué, the FSA will engage the help of the police and the Consumer Affairs Agency in bringing criminal charges against it.

    Meanwhile, the cybercrime division of Tokyo’s Metropolitan Police Department recently interviewed a Japanese man in connection with the Coincheck theft after he used a dark website to trade some of the missing NEM tokens for Litecoin.

    The NEM tokens were suspected to be part of the loot from the heist, which had been divided among several different wallet addresses following its illicit transfer away from the platform. The division apparently suspects the involvement of several other individuals in the robbery and is monitoring dark websites and NEM transactions in the hopes of unmasking them.

    Finally, in less dramatic cryptocurrency news out of Japan, central bank governor Haruhiko Kuroda stated that cryptocurrency is unlikely to seriously compete with “legal tenders” as a means of payment for some time, considering that they are currently most widely used as instruments of price speculation. “Some people say they should be described as crypto-assets, not cryptocurrencies,” he explained. 

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