Bitcoin price biffed in South Korea news bungle (BTC USD)

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On Thursday, South Korea's government stated that it intends to ban cryptocurrency trading, which resulted in chaos in the virtual coin market sending the price of bitcoin into the ground, as the nation's police and tax authorities raided local exchanges on alleged tax evasion.

Bitcoin prices plunged on Thursday by almost 14 per cent, after South Korea intensified its crackdown on virtual currencies and considers a ban on all cryptocurrency trading in the country, one of the world's largest bitcoin markets. If a bill is drafted, it would still require a majority vote from the 297 members of the National Assembly, which could take months, or even longer.

Bitcoin as well as other cryptocurrency is now experiencing a huge slumped as South Korea's ministry of justice reemphasized its proposed ban on crypto trading. There are now about 20 virtual currency exchanges in the country, with the monthly turnover of the top bourse at 56 trillion won (US$52.2 billion) as of December. It seems that other government departments had only heard of the proposed ban through media reports, and hadn't been apprised of the Justice Ministry's plans.

The price of bitcoin was down more than 5% at $14,106.27 as of 10:30 a.m. ET, according to Coindesk.

The dramatic market reaction led to the country's Presidential office to put out a statement saying that the ban on cryptocurrency trading had not been finalised and was still only being considered as a possible option.

South Korea is a major trading hub for cryptocurrency, and with most of the supply of Bitcoin coming from miners in Asia, the ban may have greater ramifications than if it was carried out elsewhere.

United States billionaire investor Warren Buffet told CNBC on Wednesday the global craze over bitcoin and other cryptocurrencies would meet a "bad ending". With the turning of the year, the fever has decisively cooled, with China banning trading in the currency and now South Korea following suit. While investors and coinholders can get more money out of the virtual currency, it has brought increasing amounts of attention from authorities and regulators.

By 5pm Hong Kong time, it was trading at US$13,723.94, down 7.8 per cent. He said that no other large exchanges were under police investigation.

The 2nd largest virtual currency exchange in South Korea, Bithumb, was also raided on Wednesday, according to an official who asked to remain anonymous.

Police have been investigating Coinone's margin-trading service since previous year, according to an official who asked not to be named citing policy.

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