Representatives of the government of South Korea was seen in insider trading. They sold their own cryptocurrency shortly before the announcement of regulators on strengthening the control over the stock market. Financial Supervisory service (FSS) undertook to investigate the matter.
At a meeting of the Committee of the National Assembly on Thursday, January 18, the FSS confirmed that some officials invested in bitcoin and sold it before the government announced the introduction of new regulatory measures.
The legislator from the right-wing party said:
“There is evidence that employees of FSS sold everything they owned virtual currency just before the announcement of government measures”.
The head of the FSS Choi Heung-Sik confirmed this fact. The head of the office of the Prime Minister Hong Ki We added:
“We reaffirm that certain civil servants have made such actions”.
The legislators called for a thorough investigation, demanding to punish the guilty:
“It is inconceivable that public servants affect the market and profit”.
Local media Chosun says:
“It is expected that disagreements regarding moral hazard will be distributed as the government uses inside information to profit from transactions with virtual currency. And this is happening when the financial authorities publish reports about tightening policy towards cryptocurrency, calling the operation with them gambling”.
FSS policy concerning cryptocurrency
The law on ethics in the public service of South Korea “strictly prohibits the trading in securities of the officials to prevent the misuse of inside information”. However, because cryptocurrencies do not meet the definition of a financial asset or currency “there are no ethical rules and guidelines for investing in the virtual currency in the provisions of the FSS”. At the same time, the use of insider information may still constitute a punishable action.
Recently FSS has advised employees to refrain from trading digital currencies, stating:
“If the officials representing the Supervisory authority, will take part in speculative transactions, society will be difficult to understand the ethical component of their behavior.”