Yesterday we reported that the head of the South Korean financial watchdog admitted that at least one government official had sold their cryptocurrency holdings just before the government made comments likely to make prices crash.
More details have since emerged.
According to segye.com, a local news source, an employee of the Financial Supervisory Service, which is a branch of the Financial Supervisory Commission, sold his cryptocurrency on the 11th of December. The sale took place two days before the government held an emergency meeting to discuss a possible ban on cryptocurrency. The government’s subsequent announcements caused cryptocurrency prices to tank, and the employee made a profit of 700,000 won (about 650 USD).
The employee had purchased the cryptocurrency on the 3rd of July. He said: “I was on vacation at the time of the sale, and I did not know that the measures were announced two days later.”
The FSC said in a statement: “We are confirming facts about whether [the employee’s] virtual currency transaction is related to his job. We will complete the investigation in due time and we will take appropriate measures if necessary.”
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Ordinarily, such an action would be considered insider trading. However, as cryptocurrency has not been around long enough for a full set of regulations to exist, this particular act was not technically illegal.
“There is no code of ethics and no code of conduct for virtual currency investment in FSS regulations, so it’s difficult to say about punishment at this stage,” said an official from the FSS.
Employees were at least told to refrain from such activities yesterday by Hong Nam-ki, Director of the Office of Coordination, who said that it is “inappropriate for civil servants to trade in cryptocurrency during work hours”, according to KBS World Radio.
Although technically not illegal, this development is unlikely to sit well with a public already unhappy with a government. According to Forbes, South Korean banks earned around 2 million USD from cryptocurrency trading last year, including the state-owned Korea Development Bank.
Kim Sun-dong, a politician from the Liberal Democratic Party, said: “The government’s policies are totally misunderstood and confused.”