Bitcoin falls, one cryptocurrency jumps

Move comes less than two weeks after high-profile digital currency exchange in Seoul was hacked and went bankrupt. 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.

While bitcoin falls, one cryptocurrency jumps 20% after new link to some Japanese credit card companies

The digital currency rose 20 percent to a record high of $1.43, making it the third-largest cryptocurrency by market capitalization at $54 billion, behind bitcoin and ethereum, according to CoinMarketCap.

The gains followed news that Tokyo-based financial services company SBI Holdings and its subsidiary SBI Ripple Asia — formed with Ripple in 2016 — announced the establishment of a “consortium” with some Japanese credit card companies to utilize blockchain technology, according to an online translation of a release.

“One of the things we all have to remember is the value of a token over the long term is really going to be driven by its utility,” Ripple CEO Brad Garlinghouse said on CNBC’s “Squawk Alley.” “There’s no question there’s a lot of hype in this system.”

The gains followed news that Tokyo-based financial services company SBI Holdings and its subsidiary SBI Ripple Asia announced the establishment of a “consortium” with some Japanese credit card companies to utilize blockchain technology, according to an online translation of a release. Ripple and SBI Holdings created SBI Ripple Asia in January 2016. It wasn’t clear what the extent of Ripple’s involvement would be in the new consortium.

The digital currency rose 20 percent to a record high of $1.43, making it the third-largest cryptocurrency by market capitalization at $54 billion, behind bitcoin and ethereum, according to CoinMarketCap.

Bitcoin fell 5 percent and ethereum declined 1 percent Wednesday, according to Coinbase.

Ripple is officially the name of a San Francisco-based start-up using blockchain technology to develop a payments network for banks, digital asset exchanges and other financial institutions. Network participants use a digital coin called XRP for transactions.

The start-up owns 61 percent of the 100 billion XRP in existence. At Wednesday’s record high prices, that gives Ripple about $87.23 billion worth of the digital currency.

“We are going to invest in the ecosystem to both help accelerate the adoption of Ripple’s technology,” Ripple CEO Brad Garlinghouse said Wednesday on CNBC’s “Squawk Alley.”

One of Ripple’s selling points as laid out on the company’s website is XRP’s 4-second settlement speed, versus more than 2 minutes for ethereum and over an hour for bitcoin.

Ripple is one of the best performing this year, up more than 20,000 percent after ending 2016 at 0.64 cent. In comparison, bitcoin has gained about 1,500 percent and ethereum is up roughly 9,200 percent this year, according to CoinMarketCap.

“One of the things we all have to remember is the value of a token over the long term is really going to be driven by its utility,” Garlinghouse said. “There’s no question there’s a lot of hype in this system.”

Ripple has raised $93.6 million from investors such as CME Ventures, Standard Chartered Bank, Andreessen Horowitz and Alphabet’s GV, formerly Google Ventures, according to Crunchbase.

TechCrunch founder Mike Arrington also announced at the end of November that he is launching a $100 million “cryptofund” that will be denominated in XRP.

Wednesday’s news of a consortium with Japanese credit card companies follows an announcement earlier this month that several Japanese banks and South Korean banks are testing Ripple’s systems for cross-border payments.

More than 100 financial institutions use Ripple’s blockchain network, according to the company. In November, Ripple said American Express FX International Payments and Santander would use Ripple’s network for cross-border payments between the U.S. and the U.K.