Categories: CryptoNews

Users Sue Coincheck Over Frozen Cryptocurrency Withdrawals

The recent Coincheck exchange hack cannot go unpunished. Someone has to take the blame for this particular incident, and the bosses of the exchange formally apologized during a recent press conference. However, it seems several Coincheck users have filed a lawsuit against the exchange firm for freezing withdrawals after the theft occurred.

A Major Lawsuit for Coincheck

It has almost become the new normal to file a lawsuit when a cryptocurrency exchange gets hacked or conducts some dubious behavior. In a way, this can only be considered a good thing, as the responsible parties must be held accountable. While everyone would love to see authorities catch the culprit who hacked Coincheck, some users are not too pleased with the company itself either. Several individuals have filed a lawsuit against the Japanese exchange firm over its freezing of withdrawals shortly after the hack occurred.

The lawsuit was filed by seven Coincheck users at the Tokyo District Court. With $530 million worth of NEM being stolen from the exchange a few weeks ago, it once again became evident that centralized exchanges are a major weakness in the world of cryptocurrency. Thankfully, Coincheck made the smart decision by reimbursing all affected users, even though the official investigation regarding this hack is still ongoing. So far, it remains unclear if any of the stolen funds have been dumped on the market.

Reimbursing users was a grand gesture, but that doesn’t mean the company can’t be held accountable for the actions they took after the incident took place. More specifically, Coincheck froze all withdrawals for several hours, which was not to the liking of a lot of their users. While it is normal for exchanges to suspend all withdrawals until such matters are resolved, the ensuing market volatility forced traders to watch their holdings shrink in value at an alarming rate.

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The seven plaintiffs are demanding that the Japanese exchange return their cryptocurrencies in their original state. It seems a total of 13 currencies are involved, although only NEM has been officially named so far. For now, most of the cryptocurrencies listed on this exchange still cannot be withdrawn, which has angered a lot of users, for obvious reasons. Withdrawals of Japanese yen are accessible again, but that is not to the liking of these seven users. Instead, they want to access their cryptocurrencies, rather than convert them to fiat currency to get their money off of the exchange.

For the time being, it remains unclear when Coincheck will resume withdrawals for all cryptocurrencies. It is possible this functionality will be reinstated soon, but it may also take weeks, if not months, until things return to normal. The seven plaintiffs will seek additional compensation for the loss in value of their portfolios for as long as withdrawals remain unavailable. It is certainly possible other Coincheck users will join this lawsuit, depending on how long it takes to resolve this problem.

It will be interesting to see how Coincheck decides to handle this situation. It is in their best interest not to attract any more legal action, even though they can’t afford to open withdrawals again if the platform is not sufficiently secure. Additionally, they have to make sure all user balances are in the correct standing before letting users move their money to another wallet or exchange. It’s an uneasy situation for all parties involved; that much is certain.

JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

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JP Buntinx

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