Coincheck sued for 650 million cryptocurrency theft

Lawyers have launched proceedings against the company in the Tokyo District Court, and believe the case could turn into one of the biggest consumer rights suits in the country in 70 years, writes ABC.NET.AU

Last month criminals stole 58 billion yen ($690 million) worth of NEM coins from Coincheck and the company froze all withdrawals as it tried to get a handle on the scale of the breach.

The company promised to mostly refund 260,000 users affected by the hack.

This week, the company allowed customers to convert their NEM to yen, but it has not allowed them to move their digital currencies into their own wallets.

Lawyers are fighting restrictions on withdrawing cryptocurrencies from the exchange.

“Coincheck says it’s a security issue which is preventing them from repaying customers their cryptocurrency,” lawyer Jun Tabata said.

“But we are saying if you’ve got the currency available you must provide it to us because that’s what your rules state.”

University of Technology Sydney cryptocurrency expert Philippa Ryan speculated there simply might not be any tokens left to give back to customers.

“Coincheck made a statement that they were going to return 90 per cent of the value of everybody’s deposits to them — they have not said how,” Dr Ryan said.

Lawyers are representing 7 victims in this case, but are expecting to represent many more, with a second case expected later this month.

They said a class action suit was the best way to proceed in this case, because it was similar to when a large number of people sought damages over faulty consumer goods.

In Japan, it is difficult and expensive for small-scale investors to file lawsuits.

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