South Korea Targets Crypto Price Manipulation in First Action Under New Act
South Korean financial authorities Financial Services Commission (FSC) and Financial Supervisory Service (FSS) reported a suspect of price manipulation in the virtual asset market to the prosecution.
This marks the first case processed through formal investigation procedures under the newly enforced Virtual Asset Act, effective July 19, 2024. The case followed a structured process. Abnormal transactions were first reported by virtual asset exchanges. It was then investigated by financial authorities, deliberated by the Virtual Asset Market Investigation Deliberation Committee, and resolved by the FSC.
Crack Down on Virtual Asset Market Manipulation
According to the official press release on January 16th, the indicted suspect employed a classic short-term price manipulation tactic involving three steps: advance purchase, price manipulation, and full liquidation.
The individual initially purchased a significant quantity of specific virtual assets and then manipulated the market by rapidly submitting buy orders to artificially inflate prices and trading volumes, creating a false perception of market activity, the financial watchdogs of the country explained. Once prices rose, the suspect sold off all holdings, completing the manipulative cycle within roughly ten minutes. This manipulation reportedly caused abrupt price spikes and drops in virtual assets that had been stable.
The suspect is believed to have illicitly profited several hundred million won over a month through these transactions. With rising transaction volumes and increased price volatility in the virtual asset market, concerns about the expansion of such unfair trading practices are mounting. The financial authorities have urged users to exercise caution, as rapid price surges can lead to sudden crashes.
To combat these issues, financial authorities are enhancing investigation systems and urging exchanges to ramp up their monitoring of abnormal transactions. Plans are also underway to improve market structures, including listing and disclosure systems.
Increased Crypto Adoption
South Korea is witnessing a significant surge in cryptocurrency adoption which has been further fueled by Donald Trumps pro-crypto policy announcements. This increased market activity has led South Korean regulators to adopt a cautious stance.
This week, the FSC held its second Virtual Asset Committee meeting to address the countrys new crypto investor protection laws. Its Vice Chairman Kim So-young stated that the issue of corporate account approvals had undergone extensive review through 12 subcommittee and task force discussions, and is nearing a policy conclusion.
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Text source: CryptoPotato
