Tokyo Bourse Can’t Close Crypto Accounts amid Court Order
Japan’s stock exchange said it cannot simply close cryptocurrency accounts despite a court order.
The Tokyo Exchange said it is ‘technically difficult’ to enforce a court order to freeze assets stored in an account they manage and refund the money to the victim. According to the bourse, if they reimburse the account holder on behalf of the wallet firm, the trader would not be able to refund them and would incur losses.
Previously, regional news outlet Nikkei reported that an account holder in her 70s had wanted to close her cryptocurrency account. Yuko Fujii, her lawyer, recalled the account holder encountered a trouble in May 2016 when a trader in Saitama Prefecture invited her to trade digital currencies in the premise they could make a profit out of it.
That person told the woman to purchase virtual currencies at 30 percent higher than the market price at that time. Convinced by the trader, the account holder bought 500,000 Japanese yen ($4,525) worth of cryptocurrencies with 150 million yen ($1.4 million).
At first, the crypto account holder received payments for repurchasing cryptocurrencies. But the disbursement suddenly stopped. Following the unfortunate incident, she requested for the foreclosure of her account under the Saitama Prefecture-based trader’s name to recover the remaining 13 million yen ($117,650).
The Saitama District Court sided with the account holder’s claim. In two separate orders issued in July 2017 and April this year, the local court ruled the Tokyo exchange should close the wallet connected to the trader’s ripple account.
According to Fujii, if the bourse refuses to follow the court verdict, their client could hardly be alleviated from the damage sustained from the investment.
As the exchange has not yet repaid the woman, there are allegations the trader had moved his cryptocurrency out.
Nonetheless, the crypto bourse had sought an advisory lawyer’s assistance as it acknowledged a legal problem in refunding the woman’s money.
“We have not yet refunded the victim,” an exchange official stated, adding they received a business improvement order from the Fukuoka Financial Office in March.
The Tokyo exchange then disclosed the withdrawal of its application to hop into the wave of the cryptocurrency arena following the amended fund settlement law.
A public authority is prohibited from confiscating a cryptocurrency if no regulations or laws are in place to govern such virtual currencies, according to professor Masashi Nakajima, a financial expert familiar with the matter.
Nakajima said it is also impossible to technically guarantee a safe enforcement of the refund order, noting this move could set a precedent for money laundering and concealment if authorities fail to deal with the issue properly.
Tokyo Exchange is the fourth largest stock exchange worldwide in terms of total market capitalization of its listed firms. The biggest bourse in Asia is under the umbrella of Japan Exchange Group, Inc. that has almost 3,000 listed companies and a combined market cap of 492 million yen as of September 2014.