South Korea’s financial watchdog has referred two suspected crypto market manipulation cases to prosecutors as it expands enforcement against unfair trading.
South Korea FSC refers two crypto cases
The Financial Services Commission said it approved the referral of suspects in two virtual asset market manipulation cases at its 12th regular meeting on July 1. The cases involve alleged trading tactics that regulators say distorted prices and drew retail investors into risky trades.
The first case centers on a large crypto holder, often called a whale, who allegedly used large funds over about two months to control the price of a token listed on both domestic and overseas exchanges. The second case involves another suspect accused of using API orders and high-priced web orders to create the appearance of active trading before selling for profit.
In addition, the FSC said the first suspect used tens of billions of Korean won to buy nearly half of the token’s global circulating supply. The regulator said the suspect gained a dominant position in the market and created artificial buying pressure.
Authorities said the suspect first pushed up the token price on overseas exchanges. The price moves then influenced the same token on South Korean exchanges, drawing local investors into the market. The FSC said the suspect lost money overseas but made larger gains on domestic platforms, leaving losses concentrated among Korean investors.
API trading case draws attention
The second case focuses on what regulators described as ultra-short-term manipulation of a so-called kimchi coin. The FSC said the suspect used an API channel to place repeated small market buy and sell orders within seconds.
The suspect also placed high-priced limit buy orders through a web channel to lift the token’s price. After attracting other buyers, the suspect allegedly sold holdings in portions to lock in gains. Regulators said small-cap tokens with thin order books can move sharply when a few accounts dominate trading.
“Investors should refrain from chasing virtual assets whose prices and trading volumes surge without any reasonable cause,” the FSC said.
The regulator also warned that whale-led pump-and-dump activity can cause sharp price drops once large holders sell.
Seoul expands crypto market enforcement
South Korean prosecutors arrested two people in January 2025 over alleged price manipulation on Bithumb. That case also involved suspected violations of the Virtual Asset User Protection Act.
Moreover, South Korea created a dedicated crypto crime investigation unit as it prepared to enforce its first full crypto investor protection framework. The law gave authorities stronger tools to pursue market manipulation and other unfair trading practices.
Previously,South Korea also moved to tighten rules for financial influencers who promote stocks and crypto, as previously reported. The proposal would require clearer asset and compensation disclosures when influencers discuss investment products.
The FSC said it will improve warning systems tied to concentrated trading by small groups of accounts. It also plans to upgrade its investigation tools so regulators can detect unfair trading faster and protect users from similar schemes.
