According to Choi Heung Sik, the director of South Korea’s Financial Supervisory Service (FSC), the country’s integrated financial regulator that examines and supervises financial institutions, several officials and employees of the FSC sold bitcoin immediately before the premature statement on a possible cryptocurrency trading ban was released by Justice Minister Park Sang-ki.
Insider Trading Probe
In a hearing conducted by the South Korean financial committee, director Choi was asked by an opposition party’s lawmaker Ji Sang-wook about an insider trading allegation that emerged earlier this week. Ji directly inquired director Choi if one or more employees of the FSC sold bitcoin before statement of the Justice Minister was released and in response, director Choi stated, “yes.”
On January 11, South Korea’s Justice Minister released an independent and premature statement during a press conference that the government is planning to ban cryptocurrency trading. Merely hours later the press conference was aired on national TV, the Ministry of Strategy and Finance along with the Blue House, the executive office of President Moon Jae-in, officially refuted the potential of imposing a cryptocurrency trading ban.
The cryptocurrency trading ban proposal introduced by Justice Minister Park Sang-ki was a suggestion made by the Justice Ministry on December 28 to bring speculation within the cryptocurrency market under control. The proposal will be discussed and changed by the task force participated by the Ministry of Strategy and Finance, central bank, Fair Trade Commission, and other agencies,” said Blue House spokesperson Jeong Ki-joon.
At a financial committee hearing, FSC director Choi admitted that several officials within the agency committed insider trading by obtaining knowledge about the Justice Ministry’s statement prior to its release and selling bitcoin immediately before the statement was introduced to the public.
Hong Nam-ki, the head of the state coordination division, clarified at the hearing that the employees or officials who are accused of initiating insider trading will be investigated and punished accordingly by law. Hong emphasized that the agency will likely enforce a law to prohibit officials within the agency from trading cryptocurrencies, as it would prevent the agency, which is a part of the cryptocurrency regulation task force established by the government, from being neutral and transparent in regulating the cryptocurrency market.
The government is currently investigating into the several government officials that were alleged to have initiated insider trading. Given that it is not appropriate for a government official to trade cryptocurrencies, the agency will encourage its employees to prevent from trading cryptocurrencies i the short-term.
South Korean citizens, who already submitted a petition to the Blue House signed by more than 250,000 citizens to reject the cryptocurrency trading ban, were outraged once again by the negligence demonstrated by the FSC, an agency that is supposed to remain neutral for the benefit of the market and consumers.
The FSC will undeniably have to face questions on whether insider trading initiated by the officials within the agency impacted the motivation of Justice Minister to release such a statement in a press conference in the future.
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