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CoinCheck hack: traders to file lawsuit after $530m theft

CoinCheck hack: traders to file lawsuit after $530m theft

Users of the Tokyo-based exchange CoinCheck are set to file lawsuits on Thursday against the service after assets were frozen following the CoinCheck hack, one of the biggest cryptocurrency hacks in history.

They will request that CoinCheck allows them to withdraw funds into their digital wallets, although withdrawals were granted yesterday (Tuesday Feb 13), which lead to over $370m being withdrawn from the exchange within one day. A strong indictment of their confidence following the hack. Restrictions remain on crypto withdrawals until CoinCheck can fully guarantee their security services are up to scratch.

“We’re of the belief our business will continue. We are moving ahead with such expectations,” Chief Operating Officer Yusuke Otsuka explained, according to Reuters. “We have the necessary funding.” Coincheck is now under investigation by the FSA, who will decide whether to award it a license, having previously allowed the exchange to operate without one. “If we do not receive the license, it would be against the law to continue operations,” Otsuka added.

Following the hack, CoinCheck was widely criticised for their use of a hot wallet, rather than the more secure multisig wallet, while many of the tokens traded on the site were held using multisig, NEM coins were held in comparatively simple, less secure hot wallet.

CoinCheck has insisted from the outset that everyone would be reimbursed for their losses but a timeline for that process has yet to be realised. The total amount it would have to pay back would amount to about 46.3 billion yen (around $440m). Meanwhile, a second lawsuit towards the end of the month could see damages claimed over the hack, which only affected NEM and no other digital tokens.

“We now see the schedule for when reimbursements of NEM losses will occur,” Otsuka said. “We’re checking each currency on deposit one by one with a third-party security firm,” Otsuka said. “Once we have confirmed the security, we will resume” withdrawals.