Following declarations about tighter regulation and an exchange ban in South Korea, markets took a tumble. They have since recovered somewhat, with an influx of $50 billion USD on Friday morning. Bitcoin also recovered some of the ground it lost, positioning itself firmly above the $10,000 USD mark. Nevertheless, this market recovery comes with suspicions about foul play from the same South Korean regulators that sent it tumbling down during the week. Much like in Coinbase’s own insider trading saga, it seems that these South Korean officials, who had advanced knowledge of regulatory tightening, played on their privileged information for self-gain.
Heavy Friction and Discussions Continue Upon South Korea Regulatory News
According to local news source Chosun, insider information was leaked. Government officials in South Korea were caught trading significant amounts in cryptocurrency, conveniently before the detailed information regarding regulation went fully public. The alleged government officials were representatives of the Financial Supervisory Service (FSS) who were fully aware of the upcoming regulatory announcements. The controversial announcements generated public outcry, but now that allegations of insider trading have surfaced, a movement has emerged, asking for greater transparency.
200,000 people signed a petition asking for an official discussion of the matter within a month. While FSS officials will face investigations, it is still unclear whether the findings of those inquiries will be enough to indict officials or not. There are strict guidelines about insider trading in South Korea and the inquiries must find enough evidence to support the accusations before the process moves forward. General misuse of relevant information for personal gain is a serious enough crime, but proof might be elusive.
Regulatory Moves Expose Corruption
In general, talks about regulation of cryptocurrency markets have been on the rise recently. Although cryptocurrencies cannot be directly regulated, their contact with the traditional banking system can be regulated, opening the door to many more such instances of insider trading around the world. As banking and financial institutions are keeping a closer eye on the movement of these markets, the kind of corruption that spawned support for cryptocurrencies in the first place, is being exposed once again.
Multiple countries will begin enacting regulatory changes, and there are bound to be many more government officials who will play the markets on privileged information. This is the inevitable result of regulation, and the attempt to bring cryptocurrencies under the same rules as the traditional financial systems they seek to provide an alternative for. The markets might experience similar movements to the ones we saw last week due to the regulatory push.