Tokyo man sues Coincheck over cryptocurrency theft

February 9, 2018

Tokyo- A man in his 40s in Tokyo sued cryptocurrency exchange operator Coincheck Inc. for damages on Thursday over a high-profile theft of virtual currency NEM that hit the company late last month.

In the lawsuit filed with Tokyo District Court, the plaintiff, who had deposited tens of thousands of yen worth of NEM at Coincheck, complained that the exchange operator kept customers' assets in a computer system connected to the Internet although it should have managed such assets in an offline computer.

Coincheck committed a serious breach of duty by not taking appropriate security measures for its computer system, said the man, who runs his own business.

On Jan. 26, Coincheck lost some 260,000 customers' NEM assets worth about 58 billion yen due to unauthorized access to its computer system.

The Tokyo-based company has announced plans to reimburse affected customers in yen.

Explaining the reason for the plaintiff's action, however, his attorney said that the amount of the expected compensation is insufficient, and that it is uncertain when the reimbursement will be made.

A team of Tokyo lawyers for affected Coincheck customers is planning to file a collective damages suit against the exchange operator later this month.

Meanwhile,Tokyo police have found that Coincheck Inc. experienced suspicious access to its internal network several times via US and European servers two to three days before massive customer assets were stolen from the virtual currency exchange operator due to hacking late last month, investigative sources said Thursday.

The Metropolitan Police Department is investigating whether there is any connection between the suspicious activities and the theft of cryptocurrency NEM assets worth some 58 billion yen, partly by seeking cooperation from overseas investigative authorities.

The suspicious access might have been intended to steal information needed for remittances of virtual currency assets, the sources said.

On Jan. 26, almost all the NEM assets kept at Coincheck were lost after the company's computer system was hacked.

In the process of analyzing external access records submitted by Coincheck after the theft, the MPD confirmed that suspicious access was made to its internal network several times via U.S. and European servers between Jan. 23 and 24, according to the sources.

As the company manages a secret key that is needed to remit virtual currencies, the police are also investigating whether such information was externally accessed, the sources said.

In addition, the police discovered moves aimed at trying to exchange the stolen NEM assets for other virtual currencies through the dark web, where anonymity is virtually guaranteed, the sources said. Jiji Press