In what could be the first domino to fall in a sweeping investigation into all things cryptocurrency, Coinone, one of the top three exchanges in the country, is currently the subject of a police investigation. (Image: Yonhap)
SEOUL, Jan. 11 (Korea Bizwire) – In what could be the first domino to fall in a sweeping investigation into all things cryptocurrency, Coinone, one of the top three exchanges in the country, is currently the subject of a police investigation.
With fellow exchange Bithumb also falling under the crosshairs of the National Tax Service, industry insiders believe these developments are a harbinger of what is to come, namely a surge in government examination of cryptocurrency exchanges.
On January 9, the cybercrimes unit of the Gyeonggi Nambu Provincial Police Agency launched a probe into various individuals at Coinone on suspicions of violating financial services regulations and for allowing margin trading. The police consider margin trading to be akin to gambling.
The following day, a team of investigators from the NTS entered the offices of Bithumb, with the aim of their on-site inspection viewed as collecting data on taxable resources. Sources in the industry say the NTS move is directly related to the political discussions revolving around cryptocurrency taxation that have been taking place.
Financial Services Commission head Choi Jong-ku foreshadowed the impending wave of government involvement at a press conference on January 8. (Image: Yonhap)
Once a spectator on the sidelines, the government has gradually become an influencer in the game, introducing regulations via a special task force and ramping up pressure on commercial banks to kill cryptocurrency transactions.
Financial Services Commission head Choi Jong-ku foreshadowed the impending wave of government involvement at a press conference on January 8.
“Though it’s a problem that the system is set up so that occurrences such as business stoppages happen because of hacking incidents and power outages, we are all completely in the dark as to what is going on in [the exchanges], to the point where there is some suspicion as to whether these occurrences are of their own making.”
Choi promised that light would be shed on the unknown interior workings of the cryptocurrency exchange machine, and that all aspects, from whether the exchanges are actually holding coins to possibility of fabrication and market value manipulation will come under the microscope to satisfy regulators’ suspicions.
Following Choi’s press conference, one financial regulator speaking on condition of anonymity said, “Choi’s comments can be seen as a declaration of intent for all related government organizations to beef up investigations into cryptocurrency exchanges.”
Whether any trace of wrongdoing is uncovered at Coinone or Bithumb will be sure to have ripple effects across the industry, as the discovery of even one instance of impropriety will give regulators sufficient reason to initiate similar investigations into other exchanges.
One cryptocurrency expert, when asked to comment on the current unfolding of events, said the Coinone and Bithumb investigations may open the floodgates of government inspection.
Lina Jang (linajang@koreabizwire.com)
