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Cryptocurrency policy leaks rock bitcoin price

Dec 18,2017
The documents that outlined the government’s measures on cryptocurrency trading in Korea were leaked well before the official announcement, fueling yet another wild fluctuation in bitcoin price, a clear indication of the impact that lax security could have on the market.

The Office for Government Policy Coordination announced on Friday that documents which summarized the result of the emergency meeting held on Thursday were exposed to the general public four hours prior to the official announcement after government officials shared them on Kakao Talk, the top messenger app in Korea, a violation of national cyber security law.

According to the findings by the Office for Government Policy Coordination, an official shared draft documents via email with an official from the Ministry of Strategy and Finance on Thursday morning, shortly before the start of the emergency meeting that was slated for 10 a.m.

The documents were shared among officials in the Finance Ministry, before one of them eventually took photos of four pages of the printed documents and shared them via Kakao Talk. The content on the leaked pages included the government’s plan to ban minors and foreigners from cryptocurrency trading in Korea and names and departments of the officials in charge of the plan, as well as their office phone numbers.

They were distributed to officials from other government agencies, including the Korea Customs Service. It was later discovered that an official from the customs office uploaded the photos of the documents on a group chat room about 15 minutes after the meeting began.

“Officials sharing work documents on Kakao Talk is a violation of the National Cyber Security Management Regulation, a presidential directive,” said an official from the Policy Coordination Office, adding that officials testified they shared the photos on Kakao Talk to collect opinions from different offices before making the final draft.

By 10:30, however, the pictures of the documents were scattered to other group chat rooms, many of which included non-government employees. Documents were not officially distributed until 2:36 p.m.

The price of bitcoin, which stood at around 18.5 million won ($16,990) at the beginning of the meeting, fell about 200,000 won in the span of 30 minutes, according to Bithumb data. At other exchanges, the price fell to as low as 17.4 million won during the same period.

While the bitcoin price was in a downward spiral, posts began appearing on cryptocurrency community pages online that included the leaked photos of the documents. Pictures of two of the pages were shared online at around noon. By 12:30, all four pages were circulating online.

“I received the documents at 11:16 a.m.,” a cryptocurrency industry source told the JoongAng Ilbo.

After the uncertainty on the government stance was lifted, the price of bitcoin turned around.

Experts described the event as akin to insider trading in stock transactions, where a trader makes a profit using undisclosed information, a serious financial crime.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]