Financial authorities have reported that over the past two years since the implementation of the Virtual Asset User Protection Act, they have investigated more than 40 cases of unfair trading in virtual assets, leading to over 30 cases being referred to law enforcement.
On July 19, the Financial Services Commission and the Financial Supervisory Service announced the results of their investigations into unfair trading in the virtual asset market, coinciding with the second anniversary of the law's enactment.
In line with the law's implementation in July of last year, the financial authorities established a dedicated organization for investigating unfair trading and set up a system for continuous monitoring of unusual trading on exchanges. They have also enhanced their investigative capabilities through the introduction of digital forensics and the operation of a penalty system.
As a result, they have completed investigations into over 40 cases of unfair trading, with more than 30 cases reported to law enforcement.
The majority of the detected cases involved market manipulation. These included tactics such as 'racehorse' schemes, where prices are artificially inflated within a specific timeframe to attract investors, and 'cage' schemes that exploit deposit and withdrawal restrictions on certain exchanges. Additionally, cases of market manipulation using API keys and large-scale manipulation linked to issuing foundations or foreign exchanges were also uncovered.
Instances of fraudulent trading were also identified. Notable examples include individuals associated with virtual asset issuances spreading false information via social media to lure investors, as well as exploiting price differences between different markets within exchanges.
The average illicit gain per case was estimated at approximately 1.4 billion won (about 1.4 million USD). In terms of the scale of illicit gains, there were eight cases with gains between 500 million won and 5 billion won, and one case exceeding 5 billion won. A total of 25 individuals were implicated, with an average of eight different assets involved in each case due to the nature of short-term market manipulation.
To date, the financial authorities have imposed penalties amounting to 125% to 165% of the illicit gains in two cases: one for fraudulent trading and one for market manipulation.
The financial authorities stated, "To restore trust in the virtual asset industry and ensure sustainable development, it is crucial to eliminate unfair trading that disrupts market order. We will thoroughly investigate all illegal activities and take strict measures to create a fair and transparent market that users can trust."
* This article has been translated by AI.
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