February 15, 2018 / 6:27 AM / 7 months ago

Coincheck hit by lawsuit as investors seek restart of cryptocurrency withdrawals

TOKYO (Reuters) - Cryptocurrency investors launched a lawsuit against Coincheck Inc on Thursday, seeking to force the Tokyo-based exchange to allow them to withdraw assets worth $183,000 frozen after last month’s $530 million heist of digital money.

Lawyers representing a group of seven people who had invested in digital money at Coincheck, attend a news conference after they filed a suit at the Tokyo District Court, in Tokyo, Japan, February 15, 2018. REUTERS/Toru Hanai

The group of seven investors filed a suit at the Tokyo District Court, also requesting that Coincheck pay annualized interest of 5 percent on the value of the digital coins from notification of the claim until it resumes withdrawals.

Coincheck, which froze all withdrawals of yen and digital money after the Jan. 26 heist, restarted on Tuesday yen withdrawals, unleashing a single-day outflow of $373 million.

A man in his 20s who had invested 400,000 yen in digital money at Coincheck, attends a news conference after a group of seven investors filed a suit at the Tokyo District Court, in Tokyo, Japan, February 15, 2018. REUTERS/Toru Hanai

But it said it would keep curbs on withdrawals of cryptocurrencies until it could guarantee the secure resumption of its operations.

“I’m hoping (Coincheck) will respond quickly and let us resume withdrawals,” one of the plaintiffs said at a press conference, speaking on condition of anonymity.

The plaintiff, a man in his 20s who had invested 400,000 yen in digital money at Coincheck, said he would not cease trading cryptocurrencies and was not concerned over their safety.

“I think their value will increase,” he said. “I’ll look for a safer place to invest.”

Cryptocurrency exchange Coincheck's signboard is pictured in front of a building where their office is located in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon

The Coincheck hack, one of the biggest of digital money ever, underscored security and regulatory worries about bitcoin and other cryptocurrencies even as a global boom in these assets shows little signs of fizzling.

It also drew into focus Japan’s dash to create a system to oversee the industry. The world’s third-biggest economy became last year the first country to draw up rules, a move that was in contrast to crackdowns in countries such as China.

The plaintiffs plan to launch a second lawsuit on Feb. 27 to claim for any lost value of the digital money frozen by Coincheck, as well as other damages stemming from the curbs on withdrawals, said Hiromu Mochizuki, their lawyer.

The group’s frozen assets were worth 19.5 million yen ($183,047) as at the end of Tuesday, and span 12 virtual currencies, according to a court filing. Their value has slumped 31.3 percent, or 8.9 million yen, between the heist and Tuesday, it said.

Reporting by Thomas WilsonEditing by Shri Navaratnam

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