A court order to freeze assets stored in an account on a cryptocurrency exchange in Tokyo could not be enforced, it was learned on June 13. The exchange said it was ‘technically difficult’ to foreclose the account. A mechanism for freezing accounts on the platform has apparently not been developed yet. Experts urge crypto exchanges to put such a mechanism in place, or people could exploit the flaw to avoid seizure or to hide assets.
Tokyo Exchange Can’t Comply with Court Ordered Crypto-Account Closure Due to Technical Difficulties
The regional news outlet Nikkei has reported that a woman in her 70s requested a cryptocurrency account foreclosure. According to her lawyer, Yuko Fujii, the lady got caught in trouble in May 2016, as a trader in Saitama Prefecture convinced her that she could make a profit with virtual currencies. The lady allegedly was advised to purchase cryptocurrencies at 30% above the market price. She purchased the amount of about JPY 500,000 (~US$4,525) worth of crypto with JPY 150 million (~$1,357,500).
The lady later reconciled with the trader and was being repaid at the purchase price, but suddenly the payment stopped. She then requested the foreclosure of the account under the name of the trader to get the remaining JPY 13 million (~$117,650). Her claim was approved and the Saitama District Court ordered the exchange to foreclose the wallet linked to the trader’s ripple account twice, once in July 2017 and the other in April 2018.
But the cryptocurrency exchange replied that the wallet was technically not managed by them and that they could not refund the victim. They added that if they reimbursed the lady on behalf of the wallet company, they would not be able to get refunded by the trader, and they would suffer losses themselves…