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

Odaily Planet Daily News: The South Korean Financial Services Commission (FSC) announced today the achievements of its virtual asset market supervision. The regulatory authorities focused on cracking down on short-term manipulation, "pump and dump" schemes, and other behaviors that disrupt market order. Among the cases that have been reported, price manipulation cases constitute the majority. The South Korean FSC stated that since the implementation of the Virtual Asset User Protection Act two years ago, approximately 40 unfair trading investigations in virtual assets have been completed, and more than 30 cases have been reported or referred to judicial authorities. The majority of these involve price manipulation.

Furthermore, the regulatory body has investigated and dealt with cases such as short-term manipulation by borrowing API keys, project issuers colluding to manipulate prices, and large-scale "whale" manipulation exploiting linked trading on overseas exchanges. Some cases of fraudulent trading involved project teams disseminating false information through social media to attract investors into buying, as well as using the price linkage between USDT and BTC on exchanges for arbitrage manipulation.

To date, South Korean regulatory authorities have handed over 25 suspects to the judiciary. The average illegal profit per case is approximately 1.4 billion KRW. Among these, there were 8 cases with illegal gains ranging from 500 million to 5 billion KRW, and 1 case exceeding 5 billion KRW. Due to the distinct nature of short-term manipulation, the virtual assets involved in each case average about 8 different coins.

Regarding the confiscation of illegal proceeds, South Korea’s financial regulatory authorities have imposed fines on 2 cases, including 1 case of fraudulent trading and 1 case of price manipulation. The fines ranged from 125% to 165% of the illegal profits.

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