Thursday, 27 June 2019

Raid on South Korean exchange roils cryptocurrency markets

In South Korea prosecutors have reportedly raided the biggest cryptocurrency exchange in the country UPbit.
The prosecutors suspect the exchange has been engaged in fraud.
According to CoinDesk in Korea, investigators are from the Prosecutor's Office of the southern district of Seoul and they searched the head office of the exchange on May 10 and 11.

The prosecutor's office said that they suspect the exchange sold cryptocurrency to customers it does not actually hold saying: "We have secured hard disks and accounting books through confiscation. Analysis is expected to take days."

The exchange confirmed that it was under investigation by prosecutors and was cooperating with them. It said that services such as transactions and withdrawals had not been affected and client assets were safe. The exchange support website had a notice confirming the investigation: "UPbit is currently under investigation by the prosecution, and we are working diligently. UPbit services such as all transactions and withdrawals are operating normally. Your assets are kept securely in your account, so you can rest assured that you can use UPbit services." In spite of the raid the exchange traded $1.6 billion worth of coin during the last 24 hours.

The investigation is part of an ongoing regulatory tightening on exchanges in South Korea. In March prosecutors had raided the offices of three cryptocurrency exchanges that they thought were siphoning off funds from customers' accounts. One exchange was Coinnest, the fifth largest in South Korea. Kim Ikhwan the founder as well as another executive were taken into custody in early April.

The raid on the South Korean exchange was only one of several events that roiled the cryptocurrency markets just recently. There were two other earlier events that helped the markets to tumble.

Mt Gox trustee rumoured to be unloading shares

At about 1 PM eastern time large blocks went through in bitcoin. Chatter at the time suggested that the McGox custodian who has been tasked with selling off a large number of shares from the bankruptcy of Mt. Gox was dumping shares and this led to the market taking a dip. However, as soon as the activity ceased prices began to recover.

Graphics processors NVDA's report

NVDA makes powerful processors used in mining cryptocurrencies. The company revealed that although it had sold $289 million to cryptocurrency miners in the first quarter that it expected sales to fall fully 65 percent in the second quarter. This gloomy outlook sparked a second wave of selling in the crypto market. Finally the third down trend came with the announcement of the raid on the South Korean exchange.

The present price of bitcoin

Bitcoin's price declined along with many other cryptocoins. A recent article at CoinDesk notes that the price set a three-week low of $8,713 on Bitfinex early this morning. The price managed to open just above the $9,000 mark at $9,014.61 but that is approximately the high for the day so far. The low so far today is $8,511.70. At the time of posting 16:23 UTC the price was just $8,565.86. As discussed in a recent Digital Journal article bitcoin had been trading mostly within a range from $9,000 up to near to near $10,000 but had not made a break either up or down. Perhaps the price is now breaking to the downside. However, perhaps there will be a recovery after the bad news has been digested. 

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