- South Korea targets crypto whales after exchange mistake exposes serious oversight gaps
- Regulators tighten crypto market rules following massive Bitcoin transfer error
- New enforcement plans focus on market manipulation and exchange technology failures
South Korea has tightened oversight of its cryptocurrency market after a high-profile exchange error exposed operational and market risks. The Financial Supervisory Service outlined stronger enforcement plans aimed at market integrity and investor protection. Regulators linked the action to growing concerns around large traders and weak internal controls.
Recent events at Bithumb accelerated regulatory pressure across the sector after the exchange mistakenly transferred 620,000 bitcoin during a promotional event. The scale of the error briefly disrupted confidence and raised serious questions about internal risk management standards.
Although the exchange recovered nearly all transferred assets, authorities treated the incident as a warning and moved quickly to tighten oversight. Consequently, supervisors strengthened monitoring and enforcement tools, stressing that operational mistakes can amplify volatility and harm retail investors.
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Crackdown intensifies on whale-driven market behavior
Market supervision will now focus more closely on large-scale traders known for influencing prices through coordinated activity and liquidity concentration. Regulators believe unchecked whale behavior undermines fair price discovery and weakens overall market trust.
The watchdog plans targeted investigations into price manipulation during trading restrictions, when tokens often see sharp moves. Such activity during suspended deposits or withdrawals distorts market signals and disadvantages smaller traders.
Oversight will also extend to rapid price-pumping strategies tied to automated trading systems that exaggerate short-term volatility. According to Yonhap, authorities said misleading social media campaigns pose direct threats to market order and consumer protection, with enforcement actions expected.
Exchange errors push tougher rules on IT systems
Beyond trading behavior, regulators have turned attention to technology infrastructure across financial firms, introducing harsher penalties for IT-related accidents that disrupt services. Banks, brokerages, and digital asset platforms now face higher accountability standards as authorities raise expectations.
The Bithumb incident reinforced concerns about internal safeguards and system resilience, pushing supervisors to treat technology stability as essential to market integrity. Firms must now demonstrate stronger controls and faster response mechanisms to meet regulatory expectations.
At the same time, the watchdog has created a task force to prepare for new crypto legislation, supporting the rollout of the Digital Asset Basic Act. The law forms the second phase of regulation and aims to formalize oversight across issuance, trading, and custody.
Disclosure standards for token issuance and exchange listings are under development, while licensing review manuals for digital asset service providers and stablecoin issuers are also in progress. According to regulators, the final version of the legislation is expected in the first quarter of this year.
Together, these measures reflect a coordinated effort to curb whale influence and reduce operational risk. Authorities believe stronger supervision will stabilize markets and improve long-term investor confidence.
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