A class action lawsuit is being prepared by a group of lawyers in Japan over forked coins that cryptocurrency exchanges are not granting to their customers. Citing that these coins belong to the customers, the group seeks to change the business practices of crypto exchanges and obtain the forked coins for the plaintiffs.
Class Action Lawsuit Over Forked Coins
A group of lawyers is preparing a class action lawsuit against the majority of crypto exchanges in Japan for withholding customers’ forked cryptocurrencies. They have formed a litigation counsel seeking to represent crypto holders nationwide in obtaining their forked cryptocurrencies from exchanges. The group announced on Thursday, May 31:
This is to bring back the virtual currency (hard fork coins) that most exchanges do not grant to the original owners.
“The virtual currency you deposit at an exchange should not belong to the exchange, but to the user,” the lawyers explained on their website created for traders to join the lawsuit, emphasizing that the exchanges currently judge for themselves whether to give these coins to customers.
If they decide not to grant these coins to customers, then these “forked coins will be that of the exchanges, [and] the exchanges will be free to use them and make them profitable,” the group detailed.
In addition, if they decide to grant these coins to customers after a considerable amount of time, then users cannot benefit during that period, but “the exchanges can raise their operating profits [with the coins] during that period.”
Citing that there is no legal basis for handling hard forks, the lawyers stated that it is “unhealthy” how the exchanges currently judge whether to grant customers their forked coins, adding:
If you deposit a virtual currency at an exchange, your contract with the exchange will be similar to a bank deposit. Therefore, [when] the deposited virtual currency is hard forked, the forked coins generated by the division are considered to belong to you, not to the exchange. In other words, it is a natural interpretation that exchanges have an obligation to grant this.
According to Forkdrop.io, there have been 110 forked coins; BTC has been forked 70 times.
Five lawyers are participating in this lawsuit: Masaki Yoshida, Miki Fukuda, Kenzo Nakamura, Taiji Jonnouchi, and Koizumi Makoto. Their website also states, without further elaboration, that “Participation from overseas is also possible.”
The lawyers say that they have received requests regarding forked coins from a group of plaintiffs. After investigating the situation, they found a considerable legal problem in dealing with exchanges over obtaining forked coins.
This is not the group’s first legal case concerning cryptocurrencies. Their announcement reveals that they previously filed a lawsuit against Coincheck in the Tokyo district court after it was hacked in January.
For the hard fork lawsuit, the group’s fee is 20% of the forked coins if there is a winning judgment or settlement, the website detailed and quoted Yoshida saying (loosely translated):
We formed this lawyer [group] to pursue changes of business practices pertaining to virtual currency trading.