South Korea refers crypto market manipulation suspects to investigators

South Korea’s Financial Services Commission has referred suspects from four separate cryptocurrency market manipulation cases to investigative authorities. The regulatory actions target illegal trading schemes designed to deceive retail investors and artificially inflate market activity.

One major case involves executives at a digital asset operating company who allegedly employed market makers to engage in wash trading. These coordinated trades between accounts controlled by the company and its staff reportedly accounted for over 90% of the token's total trading volume. This tactic was reportedly used to meet listing requirements on mid-sized exchanges and to bolster applications for listing on larger, major exchanges.

Three other cases involve ultra-short-term price manipulation using automated trading programs via Application Programming Interfaces (APIs). In one instance, two siblings utilized matching automated tactics to create a “flashing order book” effect. By executing high-frequency, small-volume buy and sell orders, they created the illusion of high liquidity and heavy trading volume. This allowed them to drive prices to target levels before rapidly offloading holdings for illicit profits.

Since the implementation of the Virtual Asset User Protection Act, South Korean authorities have investigated approximately 40 cases, referring about 30 to investigators. Under current law, individuals facing illicit gains can face significant prison sentences depending on the amount recovered.