A South Korean lawmaker has shown how the government’s announcement policy enabled market manipulation last week following the news of possible cryptocurrency trading shutdown. According to his evidence, reporters and officials had 40 minutes to buy the dip as the price of bitcoin in Korean won reversed and rallied.
Embargo Enables Market Manipulation
Representative Ha Tae-keung of the South Korean Bareun Party held a press conference at the National Assembly on Friday to assail the current practice of regulatory announcements. “The government intervened in the virtual currency market and led the manipulation of the market,” he was quoted by Asia Economy. Korea Joongang Daily elaborated:
“An opposition lawmaker Friday blasted the government for putting an embargo on an announcement about bitcoin regulations Monday – giving reporters and officials 40 minutes to snap up cryptocurrencies.”
Ha explained that “the government informed reporters at 9 a.m. last Monday of its impending announcement with an embargo attached, which was lifted at 9:40 a.m.”
Prior to the announcement, traders learned that the regulators could ban cryptocurrency trading. However, Chung Ki-joon, head of the Prime Minister’s Economic Policy Coordination, prepared to announced that “the government’s changed [its] position on digital currency regulations at 9:40 a.m. on Monday, saying the government would not shut down cryptocurrency trading,” the news outlet conveyed. “Anyone who knew the government would ease its stance on digital currencies could anticipate a rally and buy before it took off.”
The lawmaker was quoted saying:
“After the government sent text messages informing reporters of the impending announcement [which was not disclosed to the public], the market began to rally. When the press began reporting the announcement at 9:40 a.m., it already had reached a high price point.”
Buying the Dip
“I analyzed the government embargo press release by time zone and confirmed that the market profit margin has changed considerably for 40 minutes before the embargo is lifted,” Ha was quoted by Etoday.
According to the chart he prepared, bitcoin was trading at 19.07 million won (~USD$17,864) at 9 a.m. Korea time last Monday morning. At 9:40 a.m., shortly before the embargo ended, the price of bitcoin had climbed to 19.46 million won. By 10 a.m., the price had already reached its peak at almost 20 million won.
“It is common sense that public officials should be kept from information that would affect people’s assets until an official announcement,” Korea Joongang Daily quoted Ha. “The government announcement, which will cause huge fluctuations in the virtual currency market, should be announced in full swing,” he was further quoted by Etoday, adding that:
Because of this embargo operation, the people suffered tremendous damage to [their] property.
What do you think of Ha’s argument that the government’s policy led to the manipulation of bitcoin’s price? Let us know in the comments section below.
Images courtesy of Shutterstock and Ha Tae-keung.