South Korea has intensified its crackdown on cryptocurrency market abuse after the Financial Services Commission (FSC) referred two alleged crypto price manipulation cases to prosecutors. The move marks another step in the country’s broader effort to strengthen oversight of digital asset trading and enforce rules introduced under its virtual asset regulatory framework.
The regulator approved the referrals during its latest commission meeting after investigators concluded there was sufficient evidence of suspected market manipulation. The cases involve different trading strategies that authorities believe distorted cryptocurrency prices and harmed retail investors.
Whale Trading Scheme
The first case centers on a large investor, commonly known as a crypto whale, who allegedly spent tens of billions of Korean won over approximately two months to manipulate the price of a cryptocurrency listed on both domestic and international exchanges.
According to regulators, the suspect accumulated nearly half of the token’s circulating supply, giving them significant influence over the market. Investigators allege the investor first pushed prices higher on overseas exchanges before exploiting price links between international and South Korean trading platforms. As domestic investors entered the market during the rally, the suspect allegedly sold holdings at elevated prices, generating profits while leaving retail traders with substantial losses.
Authorities warned investors to be cautious when digital assets experience sharp increases in price or trading volume without a clear fundamental reason.
Second Case Targets High Frequency Trading Tactics
The second investigation focuses on an individual accused of manipulating prices through rapid trading activity involving API-based market orders and strategically placed limit orders. Regulators allege the trader repeatedly created the appearance of strong buying demand in a locally traded cryptocurrency before gradually selling accumulated holdings for profit.
Officials believe the trading pattern generated misleading market signals that encouraged other investors to purchase the asset at inflated prices.
The FSC said it plans to strengthen surveillance of concentrated trading activity and improve its market warning system to identify suspicious behavior more quickly. The regulator also intends to enhance monitoring of large investor holdings and disposal patterns as it seeks to detect market abuse before retail investors suffer significant losses.
The referrals highlight South Korea’s increasingly aggressive enforcement of cryptocurrency regulations and reinforce the government’s commitment to improving market integrity as digital asset trading continues to attract strong participation from retail investors.
