As authorities raid Coincheck offices, users eye suit against exchange

As authorities raid Coincheck offices, users eye suit against exchange

Coincheck1

Inspectors of Japan’s Financial Services Agency (FSA) have raided the offices of the Coincheck cryptocurrency exchange, which was hacked and robbed in the end of January, reports Nikkei.

Coincheck lost almost all NEM (XEM) coins held by around 260 000 of its clients, amounting to around $530 million, making it the largest cryptocurrency heist in history so far. Coincheck did not admit to security flaws and said they will refund the clients, but did not provide any further details as to when and how, except that the sums will be returned in JPY (around JPY 46 billion).

According to the publication, this is the first time FSA raids the offices of a cryptocurrency exchange. The FSA officials inspected Coincheck’s financial situation to see whether it would be able to return the funds to its clients and to check on the implemented security measures.

“The investigation is being conducted to protect the current users,” said Finance Minister Taro Aso on Friday, quoted by Nikkei.

Following the heist, the FSA has ordered Coincheck to take appropriate action to compensate its clients in a timely manner and to implement security measures to prevent further such accidents. Additionally, the watchdog demanded that Coincheck submits a written report by February 13.

Meanwhile, however, The Japan Times reports that victims of the heist have launched an association to jointly seek reimbursement and consider filing a lawsuit against Coincheck. The organization consists of around 30 account holders, as well as several lawyers. Among the account holders there are also clients who cannot withdraw their (existing) funds, as, following the heist, the exchange has halted all withdrawals – in NEM, other coins and JPY.

“We urge (Coincheck) to enable us to withdraw money soon,” said a 42-year-old man who heads the association, adding that the group also wants the company to make public its financial data the verify claims that it can pay compensation.

Despite the refusal of Coincheck officials to admit any security flaws, experts point out that the company has chosen convenience and speed of service over security by storing the client funds in an online hot wallet, which is generally deemed risky.

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