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South Korea probed 40 cases of crypto manipulation over 2 years
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- DeepHorus
South Korea's financial authorities have investigated more than 40 cases of unfair trading, including market manipulation and fraudulent crypto trading, over the past two years since the Virtual Asset User Protection Act took effect in July 2024. The figures were disclosed by Financial Services Commission (FSC) Chair Lee Eog-won in a social media post marking the second anniversary of the act's enactment. This marks a significant step in regulating the previously unregulated virtual asset market and protecting investors.
The Virtual Asset User Protection Act was designed to safeguard users who purchase and store crypto assets with virtual asset service providers (VASPs). Under the law, VASPs are legally required to separate user deposits and virtual assets from their own corporate holdings and must hold client deposits in banks. The legislation specifically targets illicit activities such as insider trading, wash trading, and market manipulation, while expanding the FSCās authority to supervise and inspect VASPs.
According to Lee's post, 30 of the investigated cases were reported to or referred to investigative agencies, leading to the identification of 25 suspects. The average unlawful gains were approximately 1.4 billion Korean won ($940,000). These figures highlight the scale of illegal activities that have occurred within South Korea's crypto market and the effectiveness of the new regulatory framework in detecting wrongdoing.
The implications of these investigations are far-reaching for the crypto industry in South Korea. The act has brought virtual assets under a legal umbrella, establishing a user protection system that was previously absent. By holding wrongdoers accountable, the authorities aim to deter future misconduct and foster a more transparent and trustworthy market environment.
Lee emphasized the importance of the act, stating, 'It was a meaningful time that brought the virtual asset market, which was outside the institutional framework at the time, into the fold of the law and created an opportunity to establish a user protection system for virtual assets.' His remarks underscore the governmentās commitment to regulating the sector and protecting retail investors.
Looking ahead, South Korea plans to enhance its market oversight capabilities. Lee added, 'We will continue to enhance market surveillance investigation and monitoring systems based on AI, and proactively respond to high-risk areas.' Additionally, South Korea is moving to incorporate digital assets into a new state asset management system, further integrating cryptocurrencies into the broader financial regulatory framework. This proactive stance signals a continued crackdown on illegal activities and a push for a safer crypto ecosystem.
