South Korean Government Officials Outed for Insider Trading Ahead of Bitcoin Flash Crash
Government officials employed by South Korea’s Financial Supervisory Service (FSC) have been outed for insider trading, according to CCN. Allegedly, these insiders sold bitcoin just before Justice Minister Park Sang-ki warned that cryptocurrency exchanges could be shut down.
Insider Trading Controversy
FSC director Choi Heung Sik has reported the incident after being questioned by Ji Sang-wook, a member of the opposition party. When asked whether employees of the FSC unloaded bitcoin before the Justice Minister’s statement, Choi responded, “yes.”
At a financial committee hearing, Choi indicated that several members of his staff sold bitcoin after obtaining knowledge of Justice Minister Park Sang-ki’s statement. The government is now investigating the matter further. No officials have yet to be named in the insider trading probe.
Justice Minister Park triggered a global outcry last week after he said Seoul was on the verge of banning cryptocurrencies. It didn’t take long for the government to rebuke the statement by claiming that a ban was only one of several measures being considered by lawmakers.
Blue House, the executive office of President Moon Jae-in, attempted to quell the rumors by issuing the following statement:
“The cryptocurrency trading ban proposal introduced by Justice Minister Park Sang-ki was a suggestion made by the Justice Ministry on December 28 to bring speculation within the cryptocurrency market under control. The proposal will be discussed and changed by the task force participated by the Ministry of Strategy and Finance, central bank, Fair Trade Commission, and other agencies.”
By selling just before the Justice Minister’s statement, investors would have avoided a 50% drop in bitcoin. Short-sellers would have then been able to snatch up the digital currency at a fraction of its all-time high.
As one might expect, South Koreans are vehemently opposed to any ban on cryptocurrency trading, with the president’s office receiving a petition signed by more than 250,000 people urging government to reject such measures. South Korea is particularly known for its heavy speculation in cryptocurrency, with the nation driving a huge chunk of daily trade volumes.
Seoul is still considering appropriate measures to rein in crypto speculation, but officials have not committed to any new course of action. Last month, government announced a series of measures aimed to tame the speculative market, including banning anonymous trading accounts and closing new registrations.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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