Bitcoin plunged by more than $1,000 on Thursday after South Korea said it was planning a crackdown on trading in the digital currency in the latest of a string of warnings for investors.
In a further illustration of bitcoin’s volatility, it dropped to around $13,500 after trading at about $15,400 on Wednesday. The cryptocurrency has surged in value this year by more than 900%, becoming one of the biggest stories in finance amid a slew of warnings of a pending market crash, hitting a record high of almost $20,000 earlier this month.
South Korea, which is one of the biggest markets in the world for bitcoin, said it was preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.
According to Reuters, the government issued a statement saying it had “warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility”.
The move comes less than two weeks after the high-profile bankruptcy of one of the country’s digital currency exchanges, after the Seoul-based platform was hit by hackers for a second time.
The exchange, called Youbit, shut down after losing 17% of its assets in a cyber-attack which was later blamed on North Korean hackers. The incident followed several other attacks against cryptocurrency platforms, such as a hack earlier in the month against the cryto-mining marketplace NiceHash, which lost around 4,700 bitcoins in the attack.
The crackdown in South Korea comes amid repeat warnings from leading figures in finance and some of the world’s top economists, who have said the currency is a vehicle for fraudsters and drug dealers. There are also fears that its rapid increase in value this year could quickly unwind, causing severe losses for investors.