FSS officials may have been trading in bitcoin

Officials at the country’s financial watchdog may have sold cryptocurrencies ahead of the government’s announcement of tough policy toward the trade, guaranteeing a public uproar over breach of ethical standards.

At a parliamentary hearing on Thursday, Choe Heung-sik, head of the Financial Supervisory Service (FSS), said an FSS employee was being investigated on suspicion that he or she traded a digital currency with knowledge gained from his or her position.

Hong Nam-ki, director of the Office for Government Policy Coordination, said that he ordered a probe into two officials who allegedly exploited confidential information for personal profits in cryptocurrency trading.

It’s not clear whether this was two additional officials or if one was the same official mentioned by Choe.

“I have delivered my concern that public officials should restrain from trading digital currencies,” he noted.

It was reported by Chosun Biz that one of the FSS officials who was seconded to the policy coordination office used inside information to sell a cryptocurrency before the government’s announcement of tight regulations that sent the value of cryptocurrencies plummeting.

A public uproar appears inevitable given that the markets have gyrated in recent weeks on wildly inconsistent policy announcements by the Korean government.

Korea’s cryptocurrency market has grown to the world’s third largest after the United States and Japan.

When Justice Minister Park Sang-ki raised the possibility of shutting down the country’s exchanges on Jan. 11, the bitcoin prices in Korea dropped to 17.5 million won ($16,350) from the previous day’s high of 23.69 million won, according to Bithumb, Korea’s second largest cryptocurrency exchange.

Public disgruntlement was already palpable Thursday.

One internet user left a comment on Naver that Choe’s acknowledgment proved that it was “government officials who profited enormously by selling” cryptocurrencies at their peak, knowing they would crash. “All those involved should be investigated by a special probe,” said the user.

On the Blue House’s petition board, one user asked, “Why does the government try to keep people [from the cryptocurrency trading] when its officials are all doing it?"

The price of bitcoin was 14.39 million won as of 7 p.m. Thursday, according to Bithumb, 12.36 percent up from 24 hours earlier.

BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]