Employees from the Financial Supervision Service (FSS) of South Korea were blamed for using information about forthcoming regulatory tightening for their personal benefit.

The FSS representative confirmed that they found out that one or two employees of the FSS sold all their cryptocurrency assets shortly before the regulators announced the strengthening of control over the cryptocurrency market.

"There is evidence that FSS employees sold all their virtual currencies just before the government announced regulatory measures," one South Korean lawmaker claimed at a meeting of the National Assembly's Committee on 18 January.

Choi Hyung-Sik, the head of the Financial Supervisory Commission, confirmed this information. The lawmakers of the committee called for thorough investigation and punishment of those employees, saying, that "it is a tremendous thing for civil servants to influence the market and gain profits," local news portal reports.

Now the Financial Supervision Service (FSS) is conducting the investigation of the incident.

The law on ethical standards in the public service of South Korea strictly prohibits officials from participating in the trading of securities in the light of the possibility of using insider information.

However, since cryptocurrencies do not fall under the definition of securities, financial assets or currencies, there is no indication in the FSS provisions that investment in virtual money is inadmissible. At the same time, the use of insider information can still qualify as a punishable act.