Over 220,000 petitioners want Seoul to stay away from cryptocurrency markets

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Investors in South Korea are urging the government to leave the markets alone after conflicting reports of possible cryptocurrency regulation sent the value of digital currencies into the red recently.

The confusion and friction over a reported proposal to shut down cryptocurrency exchanges in South Korea continued this week: On Monday, the Office for Government Policy Coordination downplayed Justice Minister Park Sang-ki’s remarks last week that South Korean authorities are working on a proposal to shutter domestic exchanges, saying it will make a decision only after “sufficient consultation and coordination of opinions.”

Finance Minister Kim Dong-yeon sang a different tune on Tuesday, when he disclosed that the administration is indeed mulling a clampdown on cryptocurrency exchanges. That statement was confirmed by Financial Services Commission Chief Choi Jong-ku on Thursday during a national policy meeting, saying that Seoul is “considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law.”

The news sent price of cryptocurrencies crashing by about 40 percent across the board on Wednesday, and by Friday evening, more than 220,000 people already signed the online petition for South Korean President Moon Jae-In and his government to leave the cryptocurrency market alone.

This isn’t the first time that South Koreans have called out the government for meddling with cryptocurrencies. Last week, over 60,000 citizens petitioned the Blue House to terminate Justice Minister Park, who broke the news of a crackdown on exchanges without the executive office’s approval.

Case of insider trading

Even before it’s enacted, the cryptocurrency regulation is already marred by controversy—and a possible case of insider trading.

On Thursday, local media outlets reported that officials from the government’s Financial Supervisory Service (FSS), who were aware of a looming crackdown on cryptocurrency trading, “invested in virtual money, and then collected the proceeds of the sale just before the government announced the measures.”

FSS chief Choi Hyung-sik admitted the allegations in a meeting, saying: “We have confirmed the intelligence. We have confirmed that some public officials have done such an act.”

The Office of the Prime Minister has launched an investigation into the matter, although an FSS official was quoted by South Korean news outlet Chosun saying that “there is no code of ethics and no code of conduct for virtual currency investment in FSS regulations, so it’s difficult to say about punishment at this stage.” There’s also a possibility that the officials involved will be charged with not with insider trading, but “misuse of internal information.”