South Korean financial authorities investigated more than 40 cases of unfair crypto trading during the first two years of the Virtual Asset User Protection Act, according to Financial Services Commission Chair Lee Eog-won.
Summary
- Korean regulators investigated over 40 unfair crypto trading cases during the law’s first two years.
- Authorities referred more than 30 cases for investigation and identified 25 suspects linked to misconduct.
- Regulators plan stronger AI-based surveillance as South Korea expands oversight of high-risk crypto market activity.
The cases covered suspected market manipulation and other fraudulent trading activity.
Authorities reported or referred more than 30 cases to investigative agencies and identified 25 suspects. Lee said average unlawful gains reached about 1.4 billion Korean won, or roughly $940,000, per case. He published the figures as the law marked two years since taking effect in July 2024.
“Today marks the second anniversary of the enactment of the Virtual Asset User Protection Act,” Lee wrote.
He said the law brought the crypto market into a formal legal framework and created a system aimed at protecting users.
Regulators plan wider market surveillance
The Virtual Asset User Protection Act sets rules for how virtual asset service providers handle customer funds and assets. It requires providers to separate customer holdings from company assets and keep user deposits with banks. The law also gives regulators powers to inspect service providers and act against practices such as insider trading, wash trading and market manipulation.
South Korea has used those powers in several recent cases. As crypto.news reported earlier this month, the FSC referred two suspected market manipulation cases to prosecutors. One case involved a trader accused of buying close to half of a token’s circulating supply before selling into rising demand. The regulator warned users about sharp price and volume moves linked to low-liquidity tokens.
The latest two-year figures show that enforcement has moved beyond individual cases. The FSC said authorities have targeted short-term price manipulation and other trading patterns that can distort markets. Lee added that regulators plan to improve surveillance, investigation and monitoring systems with artificial intelligence and focus more closely on high-risk areas.
“We will continue to enhance market surveillance, investigation and monitoring systems based on AI,” Lee said. The regulator has not disclosed a full public list of the 40-plus cases or detailed the status of every referral.
Meanwhile, South Korea continues to expand its digital asset rules.The government is moving to bring cryptocurrencies and other digital assets under a new state asset management framework. The proposal would extend state asset rules beyond traditional holdings such as real estate.
Authorities have also increased scrutiny of unregistered crypto operators. Crypto.news reported in June that the Financial Intelligence Unit had referred about 40 unregistered operators to law enforcement and warned users about risks tied to platforms operating outside the country’s registration system.
The Virtual Asset User Protection Act took effect on July 19, 2024, as South Korea’s first dedicated law focused on crypto user protection and unfair trading. Two years later, regulators are using the framework to pursue alleged market abuse while preparing wider digital asset rules and new monitoring tools.
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