Bitcoin along with other virtual currencies are quite popular in Asia including South Korea. Bitcoin has even been hailed as one of the best technological innovations of our time. However, why did South Korea all of a sudden became too terrified about the effects of Bitcoin and other cryptocurrencies?
South Korean Ministry of Justice announced that the country is going to shut down local cryptocurrency exchanges. After the announcement, it has created a domino effect in the world of digital currencies.
Prime Minister Lee Nak-yeon mentioned last month that cryptocurrencies are corrupting the young and could lead towards a “social pathological phenomena”. Also, Hong Nam-ki, minister for South Korea’s government policy coordination mentioned that Korea’s interest in virtual currencies is considered “abnormal”.
After the announcement, Bitcoin dropped by 13.8% in Bithub from $20,181 to $17,400. Until now, Bitcoin hasn’t recovered.
South Korea is the third largest market for Bitcoin trading after Japan and US. South Korea made up 20% of the total of all Bitcoin trading volume worldwide. So why the sudden change of heart for South Korea’s regulators?
North Korea’s Role in Stealing Bitcoin?
North Korea could have partly affected South Korea’s decision to heighten up their regulations on cryptocurrencies. On May 2017, North Korea started mining Bitcoin.
In addition to this, it has been confirmed by the US government that North Korea was behind WannaCry hack that has demanded ransom in Bitcoin.
CEO of CrowdStrike, George Kurtz has mentioned that there is a reason why North Korea has become interested in Bitcoin. He also mentioned that there is a chance that North Korea is amassing Bitcoin in order to fund their future attacks.
Bitcoin being an anonymous currency, it has a chance to bypass regulations and sanctions. In addition to this, the value of Bitcoin has jumped significantly from the start of January 2017 to the present.
Extent of North Korea’s Cyber Attacks
The WannaCry hack has managed to affect banks, companies, and hospitals all over the world. Now, it also has shown the capability of North Korea when it comes to its capability in performing cyber-attacks.
YouBit, in December, closed after it was hacked and one-fifth of the clients’ holdings were lost in the process. In addition to this, it was also attacked on April 2017 losing a total of $35 million. In these separate incidents, Pyongyang also seems like a logical suspect. North Korea is seen responsible for the four other South Korean Bitcoin exchanges attacked in the past summer.
Legitimate Concerns Regarding Fraud
Aside from the possibility of North Korea amassing more Bitcoin, South Korean authorities are trying to fight fraud. Last December, authorities have seized $200 million from MiningMax, a cryptocurrency Ponzi scheme, and BitKRX that claims to be a legitimate Bitcoin exchange but has been discovered for its fraudulent activities.
From North Korea’s plot to pool Bitcoin to actual fraud, these are just some of the reasons why South Korea has tightened its policies when it comes to Bitcoin and other cryptocurrencies. Could this mean that Bitcoin price can be affected by political decisions?