Prices of Virtual Currencies Nosedive as Ministry of Justice Looks to Close Virtual Currency Exchanges

Jan 12, 2018

There has been total chaos such as collapse of prices of various virtual currencies when Ministry of Justice announced its plan to close virtual currency exchanges. Bitcoin, which is the most popular virtual currency, was even traded at a price 30% lower than normal price at a South Korean virtual currency exchange.
Individual investors are opposing this tough measure made suddenly by Ministry of Justice. ‘National Petitions and Suggestions’ that are on the homepage of The Blue House are filled with letters that oppose closing of virtual currency exchanges. The Blue House said that nothing is confirmed and is working to resolve such issue.
“Ministry of Justice is preparing a bill that will prohibit any transactions of virtual money.” said Minister Park Sang-ki of Ministry of Justice on the 11th regarding problems of virtual currency. “Ultimately we want to shut down virtual currency exchanges.”
“We are preparing a bill in order to close virtual currency exchanges.” said Minister Park. “I see that the term ‘virtual currency’ is not even accurate and that the correct term should be ‘virtual token’.”
When South Korean Government put out additional special measures in order to put an end to speculations of virtual currency on the 28th of December, it made it official that it is going to look into enactment of special laws for closing virtual currency exchanges while saying that it cannot leave alone unreasonable speculations anymore. Financial Services Commission also showed its intention of cracking down crimes involving virtual currency and putting an end to speculations through its emergency briefing regarding virtual currency on the 8th.
South Korean Government also started actual investigations after giving warnings.
National Tax Service carried out on-site investigations at the headquarters of Coinone and Bithumb on the 10th. Coinone is also being investigated by Gyeonggi Nambu Provincial Police Agency’s Cyber Bureau for violating Capital Market Act.
Coinone provided ‘margin trading’ service to its members that allows them to estimate market price up to a week later and make trades. This service allows them to make trades at a certain price in advance and pays them profits if they are correct with their estimations. Gyeonggi Nambu Provincial Police Agency saw that Coinone did not have approvals from financial authorities and that this ‘margin trading’ service is similar to gambling.
As pressure from South Korean Government towards virtual currency is becoming stronger from all directions, price of virtual currencies collapsed. After the announcement made by Ministry of Justice on this day, price of ‘Status Network Token’ dropped about 45%. Prices of most of virtual currencies such as Stellar Lumen and ADA all dropped 30 to 40%.
Deposits from other banks were temporarily put on half at some virtual currency exchanges due to overload of computer network. “Due to overload of Korea Financial Telecommunications and Cleanings Institute’s computer network, deposits from other banks into Upbit’s virtual accounts will be temporarily put on halt.”
Investors who have become angry towards tough regulations made by South Korean Government towards virtual currency even put up petitions that request removal of the director of Financial Supervisory Service and the minister of Ministry of Justice who had carried out on-site investigations. Furthermore, many virtual currency users are continuously putting up letters on The Blue House’s message board for petitions about approving virtual currency towards.
The Blue House announced that the statement made by the minister of Ministry of Justice is not a done deal. “Statement made by the minister of Ministry of Justice towards closing of virtual currency exchanges is one of measures that Ministry of Justice has been planning.” said Yoon Young-chan who is the senior presidential secretary for public relations. “It is not an issue that is finalized and final decisions will be made after discussing and mediating with each department.”
Staff Reporter Jung, Youngil | jung01@etnews.com

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