They're all trying to stay afloat - they need to eat." "It doesn't matter which they are - all are trying to make money. "Some of the people running them are cowboys, some are amateurs and some are run by very savvy professionals," Dr Ryan said. Since then, new laws have required virtual exchanges to register with the government and submit annual reports.Īs of mid-January, it had 16 registered exchanges, but Coincheck's application was still being reviewed when its hack occurred.ĭr Ryan said the cost of compliance was a systemic problem for exchanges. Japan has been one of the most proactive countries in the world when it comes to regulation of digital currencies - mostly because of the collapse of MtGox, a Japanese exchange which collapsed after more than $600 million worth of Bitcoin was stolen. It means if the criminals try to cash out the coins or use them for other cryptocurrencies, they could be easily identified. Once the hackers started moving the stolen coins, Coincheck was able to track them. Think of it as a digital dye pack for bank notes, which explodes and permanently marks stolen cash. Investigations into who is behind the theft are ongoing, but the foundation which created the NEM cryptocurrency was able to create a tagging system that flagged all of the stolen currency. In Japan, it is difficult and expensive for small-scale investors to file lawsuits. 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. Lawyers are representing 7 victims in this case, but are expecting to represent many more, with a second case expected later this month. "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. University of Technology Sydney cryptocurrency expert Philippa Ryan speculated there simply might not be any tokens left to give back to customers. "But we are saying if you've got the currency available you must provide it to us because that's what your rules state." "Coincheck says it's a security issue which is preventing them from repaying customers their cryptocurrency," lawyer Jun Tabata said. Lawyers are fighting restrictions on withdrawing cryptocurrencies from the exchange. 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. The company promised to mostly refund 260,000 users affected by the hack. Despite the comparable figures, Coinchecks hack didnt quite. 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. It lost between 400 and 480 million from the heist, prompting Japans legislators to pass a law to regulate bitcoin exchanges. 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.
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