CRYPTO CRACKDOWN

Police are raiding bitcoin exchanges in South Korea

Obsession
Future of Finance
Obsession
Future of Finance

Bitcoin prices fell last month after South Korean authorities announced steps to regulate cryptoassets. This week, authorities raided some of South Korea’s biggest cryptocurrency exchanges.

Coinone and Bithumb, two large exchanges for virtual currencies like bitcoin, ether, and litecoin, were raided by police and tax authorities, according to Reuters. An official at Coinone said that National Tax Service investigators had paid a sudden visit, while an employee at Bithumb said the company was asked to disclose paperwork. The Coinone official added that the exchange has been under scrutiny since last year by local police who “think what we do is gambling.”

Virtual-currency exchanges have sprung up rapidly in the past year or so in South Korea, with everyone from college students to grandparents trying to cash in on the craze (paywall). Recently the nation accounted for some 20% of global bitcoin transactions.

In Seoul last August Bithumb launched a walk-in customer service center, and the following month Coinone opened a store front in the financial district complete with a help desk and virtual-currency ATMs.

The South Korean government announced last month it would crack down on potential money-laundering using virtual currencies, and ban anonymous accounts with cryptocurrency exchanges. Earlier this week, South Korean authorities said they were also inspecting six local banks that provide virtual-currency accounts to institutions, checking whether they were requiring real names for accounts and following rules against money laundering.

Meanwhile justice minister Park Sang-ki said today (Jan. 11) that his ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges,” which would be an even bigger development than the regulations announced so far. Bitcoin fell more than 12% following his comments.

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