Korea had quite the effect on the market last night as the total capitalization dumped nearly $100 billion in one hour.
According to recent reports, South Korean police raided the largest cryptocurrency exchanges in the nation for alleged tax evasion. Both Bithumb and Coinone, two exchanges known for trading cryptocurrency at a premium simply due to demand, had their offices “raided” in order to disclose tax paperwork.
However, it seems as though the recent media frenzy that followed completely blew the story out of proportion, and caused a market-wide panic. The government already made their intentions clear earlier in the month, when they announced plans to regulate exchanges that aren’t compliant with existing laws.
On a lighter note earlier in the week in Korea, the chairman of South Korea’s Financial Services Commission (FSC) said that the agency is looking to team up with authorities in China and Japan about regulating cryptocurrency.
FSC leader Choi Jong-ku said vice finance ministers from the three countries already discussed the matter at a meeting in December.
The FSC chief decried the “fever of speculative investment in cryptocurrency.” He also characterized those investing in cryptocurrency as “irrational,” noting how virtual currency is not able to serve as a means of payment.
Choi expressed a desire to stop money laundering and increase the punishment for illicit activity involving digital currency. The FSC has been inspecting several banks across the country who have accounts that have been used to trade digital currencies.
The comments came just a few days before the nation’s Justice Minister said on Thursday that the nation is getting a bill ready that would ban cryptocurrency trading on domestic exchanges.
The news had a drastic effect on the virtual currency market even though the Presidential office said a couple of hours later that the legislation was still not yet finalized. Any proposed bill would also have to pass a majority vote in South Korea’s National Assembly to become codified into law.
By Thursday afternoon, about 55,000 South Korean citizens had signed a petition asking the President to stop the digital currency crackdown.