Crypto Exchange Coincheck Hit By Lawsuit Over Withdrawals Freeze

Cryptocurrency investors have filed a lawsuit against Japanese crypto exchange Coincheck for freezing asset withdrawals following last month’s hack that saw the theft of millions of dollars in digital assets.

Seven plaintiffs – two companies and five individuals – took part in an initial lawsuit filed at the Tokyo District Court. The plaintiffs are seeking the reimbursement of frozen assets amounting to 19.5 million yen ($182,910 USD).

Hiromu Mochizuki, the plaintiffs’ lawyer, said the investors are planning to file a second lawsuit against Coincheck on February 27 to account for any value lost in their coins frozen by the crypto exchange, in addition to other damages resulting from withdrawal curbs.

“Plaintiffs are demanding Coincheck return their cryptocurrencies — 13 different kinds including NEM,” Mochizuki said.

The Coincheck hack last month — resulting in the disappearance of 523 million units of XEM cryptocurrency (worth over $400M) — was one of the largest of its kind. The company halted operations after the hack and prevented traders from withdrawing their cryptocurrencies from the exchange. The company also announced that it would use company funds to reimburse the approximately 260,000 affected customers to the tune of 88.549 yen (82 US cents) per token stolen. However, the timeline for the payback has not yet been determined.

The hack prompted the Japanese Financial Services Agency to search the company’s office earlier this month after slapping it with a business improvement order. Coincheck said the exchange already submitted their report to the FSA explaining how the hack happened, what support will be in place for customers, and the measures it will implement to prevent future hacks.

On Tuesday, Coincheck resumed yen withdrawals, unleashing a single-day outflow of $373 million. But the exchange said cryptocurrency withdrawals will still be frozen until it could guarantee the secure resumption of its operations.

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