What to know:
- South Korea referred two suspected crypto manipulators for criminal prosecution.
- The authorities exposed whale accumulation and automated trading manipulation tactics used.
- Meanwhile, regulators plan stronger surveillance to protect investors from future market abuse.
South Korea’s Financial Services Commission has referred two suspected cryptocurrency market manipulation cases to prosecutors, accusing the individuals of using separate trading schemes to distort digital asset prices and profit from unsuspecting investors.
The commission approved the criminal referrals during its 12th regular meeting on Wednesday. Officials said both investigations uncovered deliberate attempts to manipulate market activity and mislead traders through artificial price movements.
One case involves a suspected crypto whale who allegedly spent tens of billions of Korean won over nearly two months to influence the price of a cryptocurrency listed on both domestic and overseas exchanges. Authorities said the trader accumulated almost half of the token’s circulating supply, allowing significant control over its market availability.
According to the Financial Services Commission, the suspect then drove the token’s price higher on overseas exchanges before domestic investors entered the market. As buying activity increased, the trader allegedly sold large portions of the holdings, leaving retail investors exposed to heavy losses once the price declined.
Officials explained that the strategy relied on restricting the token’s available supply while encouraging additional buying interest. Consequently, the inflated demand allowed the suspect to exit the position at significantly higher prices.
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Second Investigation Targets Alleged Wash Trading Scheme
Meanwhile, the second investigation focused on a trader accused of creating misleading market activity through automated trading tools. Regulators alleged that the individual repeatedly placed small market buy and sell orders using API channels to generate the appearance of active trading.
Additionally, authorities claimed the suspect submitted high-priced limit buy orders through a web trading platform. Those orders allegedly encouraged other investors to purchase the cryptocurrency by creating the impression of stronger demand.
Once more, buyers entered the market and the suspect reportedly sold cryptocurrency holdings in several transactions to secure profits. Regulators believe the trading activity distorted genuine market conditions and created a false impression of liquidity.
Besides announcing the criminal referrals, the Financial Services Commission urged investors to remain cautious when trading digital assets experiencing unexplained increases in price or trading volume. The regulator warned that such movements often indicate possible market manipulation rather than genuine investor demand.
The commission also described pump-and-dump schemes as particularly harmful because organizers intentionally reduce available supply before selling large positions into rising markets. As a result, retail investors frequently suffer significant losses when prices rapidly reverse.
Moreover, the regulator said it plans to strengthen its warning system for unusually concentrated trading activity. It also intends to improve investigative capabilities so authorities can identify suspicious transactions more quickly and respond before investor losses escalate.
Conclusion
The latest enforcement action reflects South Korea’s continued efforts to strengthen oversight of the cryptocurrency market and deter unfair trading practices. By pursuing suspected manipulators and enhancing market surveillance, regulators aim to improve investor protection while promoting a more transparent digital asset trading environment.
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