Cryptocurrencies Are Plunging Today -- Here's Why

The cryptocurrency market was under pressure on Friday morning after troubling news about a major South Korean cryptocurrency exchange was announced. Leading cryptocurrency bitcoin was down by nearly 10% at 10 a.m. EDT on Friday -- and it was the best performer of the top 10, by far.

In fact, excluding Tether, whose value is linked to the U.S. dollar, all of the 35 largest cryptocurrencies by market cap, and 97 out of the top 100, were in the red on Friday. Here's a rundown of what happened and how it's affecting the major cryptocurrencies.

Image source: Getty Images.

Today's cryptocurrency prices

Here's a look at the 10 largest cryptocurrencies by market capitalization, and how much each has changed over the past 24 hours.

Data source: www.investing.com. Prices and daily changes as of 10 a.m. EDT on May 11, 2018, and prices are rounded to the nearest cent where appropriate.

The UpBit cryptocurrency exchange was raided

It was reported Friday morning that South Korean prosecutors raided cryptocurrency exchange UpBit, the country's largest, on suspicion of fraud. Korean news outlet Chosun has reported that the alleged fraud involves UpBit fabricating its balance sheet and deceiving its investors.

In the wake of the raid, UpBit sent a note to its customers indicating its cooperation with prosecutors and ensuring the safety of all client funds.

In addition to being the largest South Korean cryptocurrency exchange, UpBit is the fourth-largest cryptocurrency exchange in the world by trading volume. And while a variety of currencies are traded on the platform, the EOS cryptocurrency is the largest by volume, which explains why it's the worst performer of the top 10 today.

Why the massive drop if all funds are safe?

UpBit claims that all client funds are secure, so why the big plunge in cryptocurrencies? If the main issues are related to investor deception and not to the cryptocurrencies held by the exchange, it may seem odd that this would have such a dramatic effect on cryptocurrency prices.

In a nutshell, this action brings two of the biggest cryptocurrency worries back into investors' minds -- fraud and regulation. There has been more than enough fraudulent activity that has taken place in various cryptocurrency ventures, and an accusation of fraud on an organization with the size and reputation of UpBit sounds particularly scary.

And, the threat of increased regulation around the world -- South Korea in particular -- was one of the big reasons for the dismal performance in the cryptocurrency markets earlier this year.

The bottom line is that while this could turn out to be nothing, it's certainly scaring cryptocurrency investors for the time being.