South Korea Plans to Introduce AI-Powered Virtual Asset Supervision System, Reports Over 30 Crypto Cases in Two Years to Combat Market Manipulation

Odaily Odaily reports that the Financial Services Commission (FSC) of South Korea today announced the outcomes of its virtual asset market supervision. The regulatory body stated its focus is on cracking down on market-disrupting activities such as short-term manipulation and "pump and dump" schemes. Among the cases reported, price manipulation cases account for the majority. The FSC noted that in the two years since the implementation of the "Virtual Asset User Protection Act," it has completed investigations into approximately 40 cases of unfair trading in virtual assets, and has reported or referred over 30 cases to judicial authorities, with the majority involving price manipulation.

Furthermore, regulators have also investigated cases involving short-term manipulation through borrowed API keys, price manipulation coordinated by project issuers, and large-scale "whale" manipulation utilizing linked trading on overseas exchanges. Some fraudulent trading cases involved project teams spreading false information via social media to lure investors into buying, as well as arbitrage manipulation leveraging the price linkage between USDT and BTC on exchanges.

To date, South Korean regulators have transferred 25 suspects to judicial authorities, with the average illegal profit per case amounting to approximately 1.4 billion Korean Won. Among these, there were 8 cases involving illegal gains between 500 million and 5 billion Won, and 1 case involving gains exceeding 5 billion Won. Due to the characteristic short-term nature of the manipulation, the involved virtual assets in each case spanned an average of approximately 8 different coins.

In terms of recovering illegal proceeds, the South Korean financial regulator has imposed fines in 2 cases, including one fraudulent trading case and one price manipulation case, with fines ranging from 125% to 165% of the illegal profits obtained.

The FSC stated that it will further strengthen market monitoring capabilities in the future by introducing an AI-based virtual asset supervision system. This system is expected to include features such as real-time market monitoring, second-level price manipulation analysis, and automatic identification of suspicious accounts and trading ranges, to enhance the early detection of abnormal transactions. Additionally, South Korean regulators plan to introduce mechanisms for freezing accounts related to illegal proceeds, as well as a reporting and reward system for unfair trading, in subsequent digital asset-related legislation, aiming to further improve the regulatory framework for the virtual asset market. (KBS)