South Korean financial authorities have investigated 40 crypto market manipulation cases since the Virtual Asset User Protection Act took effect in July 2024. The two-year crackdown resulted in over 30 cases being referred to investigators and 25 suspects identified, with average illicit gains of $940,000. The Financial Services Commission plans to enhance surveillance using AI to further protect investors.
Market manipulation investigations
- ▪The average amount of unlawful gains from the investigated cases was approximately 1.4 billion Korean won ($940,000)
- ▪More than 30 of the cases were referred to investigative agencies, leading to the identification of 25 suspects
- ▪The investigations covered unfair trading, including market manipulation and fraudulent crypto trading
- ▪South Korea's financial authorities have investigated 40 cases of crypto market manipulation in the two years since a user-protection law took effect
Virtual Asset User Protection Act
- ▪The Virtual Asset User Protection Act is designed to protect users and targets illicit activities such as insider trading, wash trading, and market manipulation
- ▪The announcement of the investigation figures was made to mark the second anniversary of the Act's enactment
- ▪The investigations were conducted under the Virtual Asset User Protection Act, which came into effect in July 2024
VASP regulatory requirements
- ▪Under the law, Virtual Asset Service Providers (VASPs) are legally required to separate user deposits and virtual assets from their own corporate holdings
- ▪VASPs must also hold all client deposits in banks
Future enforcement measures
- ▪The Financial Services Commission plans to enhance its market surveillance and monitoring systems using AI
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