Bitcoin's price was volatile Wednesday into Thursday, as South Korea announced a plan to sign a bill that would ban cryptocurrency trading in the country. All cryptocurrencies tumbled on the news, with Coindesk reporting an 11% drop in bitcoin value on the day.
South Korea's government has cracked down on tax evasion, with the country's tax authorities and police raiding local bitcoin exchanges.
"There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges," Justice Minister Park Sang-ki said.
The market's immediate reaction led to cryptocurrencies falling across the board. Hours later, South Korea's president eased investor fears, claiming that a ban on cryptocurrencies is being considered but has yet to be finalized. South Korea's press official claims that the proposed ban was announced after the justice ministry had in-depth discussions with other government agencies.
A majority vote of 297 members will need to pass for the ban to be put in place. Lawmakers allege that the process could take months or even years before the ban would go into effect.
Bitcoin prices fell as much as 21% in South Korea in midday trade.
South Korea's authorities raided Bithumb and Coinone. A person, speaking in anonymity, claims that Coinone is working with investigators. Bithumb was asked to provide tax officials with paperwork.
South Korea accounts for 6-12% of bitcoin trading.
Ripple's XRP cryptocurrency was a major winner on Thursday after the currency rose as much as 3% following the announcement that Ripple will be teaming up with MoneyGram.
Reports that Electrum, a bitcoin wallet, also harmed bitcoin started the day. Evidentally, the wallets have been exposed to hacks for two years. Electrum has released an update to fix the vulnerability that has been in the software for nearly two years.
The wallets were exposed to JSON RPC interface vulnerabilities.
Electrum was slow to fix the bug. The team behind Electrum only fixed the bug after a Google researcher reported the same bug another user reported. The bug opened users up to the potential of having their funds stolen by accessing a malicious website. The website could scan for the random JSON RPC port in seconds and issue commands to the wallet.
Warren Buffett (Trades, Portfolio) spoke with CNBC earlier in the week, expressing his concerns for cryptocurrencies.
Buffett, known as The Oracle of Omaha and owner of Berkshire Hathaway (BRK.A)(BRK.B), stated that cryptocurrencies and bitcoin "will come to a bad end." Buffett claimed that he doesn’t know when cryptocurrencies will burst, but he is confident that cryptocurrencies will all go down.
Charlie Munger (Trades, Portfolio), Buffett's longtime partner, also claimed that cryptocurrencies are "bubbles." Munger explained that investors are excited in cryptocurrencies because they're going up at the moment, but explains that he isn't excited.
Kodak (KODK) announced earlier in the week that the company will launch their own cryptocurrency called "KodakCoin." The news sent the company's stock up over 200% before declining over 30% in the past two days.
Disclosure: Author does not have any stake in the listed equities.
