The state of the markets today is dismal, it’s not something we expected to see so soon to say the least. This morning, many news outlets have speculated about what is going on, some even announced that the huge dip we are seeing now is at the hands of complete randomness.
Things however now seem to be a little bit clearer, something bad is happening, and people have caught on to it.
If we refer to South Korea today, we’ll see news of UPbit, South Koreas biggest cryptocurrency exchange and the forth largest in the world, being raided by authorities under a warrant executed by suspicions of fraudulent activity occurring within the exchange.
According to reports, the raid has led to authorities seizing a mass of computer equipment and hard drives which have been taken pending further investigation. As it stands, we can’t really be sure as to the true extent of what is going on here, however, we can guess that what we are seeing in the markets is directly related to this.
UPbit are accused of essentially accounting for cryptocurrency that the exchange does not own; therefore, they have claimed to hold assets that they do not actually have, deceiving customers and causing, what could be some very substantial losses market wide.
Investors are reacting to this news by withdrawing and relieving UPbit of their funds, people are becoming very anxious about the state of their assets and as a result, are getting out while they can, this in turn seems to have sent the markets tumbling down.
The events witnessed in South Korea however are not the only negative movements we are witnessing today. According to CCN, Mt. Gox have (once again) carried out another coin dump of around 8,200 Bitcoins, since this has happened on a traditional exchange, the markets have been adversely affected.
According to CCN:
“Today, on May 11, various reports have suggested that the recent price dip of bitcoin and other cryptocurrencies was triggered by the selloff of Mt. Gox coins. Four wallets of the Mt. Gox trustee moved around 2,000 bitcoins each, sending over 8,000 bitcoins in total over the past 24 hours. Considering that the Mt. Gox trustee was asked to sell over 200,000 bitcoins and convert it to Japanese yen by local financial authorities, it is evident that any external movement of the Mt. Gox trustee’s funds likely means that they are being sold on cryptocurrency exchanges.”
In essence, what looked to be a bad start to the day, with some chance of a recovery, now seems to be as a result of some far more concerning movements within the markets. This sort of activity can have a detrimental impact on the volatile markets and evidentially, that does seem to be the case today.
We will see cryptocurrencies recover from this, our main worry now however is focused on UPbit and the damage that this scandal may have caused. For now, we will have to wait to see how the investigation in South Korea develops, we will keep a close eye on this, hopefully though, the authorities have halted this before it’s too late.
With regards to Mt. Gox, they really need to stop doing this…