Two full years after the implementation of the Virtual Asset User Protection Act, South Korean financial regulators have uncovered more than 40 cases of unfair trading practices in the crypto market. According to findings from the Financial Services Commission (FSC), perpetrators reaped an average illicit profit of 1.4 billion South Korean won, or approximately $940,000 per case - equivalent to 14 billion IDR from manipulating order books in the open market.
FSC Chairman Lee Eog-won announced these findings on the two-year anniversary of the Virtual Asset User Protection Act enacted in July 2024. Regulators moved swiftly in response to surveillance findings. Out of dozens of flagged incidents, the commission officially referred 30 cases to investigative agencies to initiate formal legal proceedings. Throughout the investigation, authorities have also identified 25 primary suspects behind various fraudulent schemes that harmed retail investors on domestic crypto exchanges.
The Faces of Exchange Manipulation
FSC report documents reveal that manipulators deployed diverse methods to siphon user funds. The series of violations targeted by authorities ranged from classic market price manipulation and insider trading using confidential information to wash trading designed to fabricate a token’s daily trading volume. Direct fraudulent practices during transaction processes were also commonly detected in secondary markets.
These vulnerabilities prompted the government to construct comprehensive safeguards through user protection legislation. The regulation tackles the root of fund misappropriation by requiring virtual asset service providers (VASPs) to segregate user crypto assets from company holdings. To eliminate theft risks, all client fiat deposits must be stored in local conventional banks.
Under the same regulatory framework, the FSC holds full authority to access, supervise, and inspect the internal operations of VASPs operating in South Korea. This power enables regulators to intervene before exchange fraud escalates into massive losses for retail users storing their funds on platforms.
Machines Combating Anomalies
Authorities recognize that manually screening millions of data points is impossible in an industry that operates 24/7. Consequently, Lee pledged to transform how the state monitors digital assets. His comprehensive plan centers on upgrading automated tracking systems and deploying artificial intelligence-powered investigative networks to detect transaction anomalies early on.
This strict enforcement aligns with the nation’s long-term economic roadmap. South Korea plans to incorporate the digital asset class into a new national asset management framework. This policy underscores the government’s intention to cleanse the space of bad actors rather than stifle the crypto industry itself.
For anyone attempting to manipulate coin prices on South Korean exchanges, the message is clear: supervisory surveillance bots will catch your every move. Reported by Cointelegraph.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
