South Korea Intensifies Crackdown on Unfair Trading in Crypto Markets: Over 40 Cases Investigated Since 2022

South Korea Cracks Down on Unfair Trading in Crypto Market: Over 40 Cases Investigated

In a significant move to bolster the integrity of its burgeoning cryptocurrency market, South Korea’s financial authorities have launched investigations into more than 40 cases of unfair trading over the past two years. This includes serious allegations of market manipulation and fraudulent crypto trading practices.

Financial Services Commission (FSC) Chair Lee Eog-won announced via an X post that 30 of these cases have been reported or referred to investigative agencies, resulting in the identification of 25 suspects since the implementation of the Virtual Asset User Protection Act in July 2024. The average unlawful gains from these activities have been estimated at around 1.4 billion Korean won, equivalent to approximately $940,000.

“Today marks the second anniversary of the enactment of the Virtual Asset User Protection Act,” Lee stated. “It has been a meaningful time that brought the virtual asset market, which was previously outside the institutional framework, into the fold of the law and created an opportunity to establish a user protection system for virtual assets.”

The Virtual Asset User Protection Act aims to safeguard users who buy and store crypto assets through Virtual Asset Service Providers (VASPs). Under this legislation, VASPs are mandated to separate user deposits and virtual assets from their corporate holdings, ensuring that client deposits are securely held in banks.

Moreover, the act targets illicit activities such as insider trading, wash trading, and market manipulation, significantly enhancing the FSC’s authority to supervise and inspect VASPs. Lee emphasized the commitment to improving market surveillance, stating, “We will continue to enhance market surveillance investigation and monitoring systems based on AI, and proactively respond to high-risk areas.”

As South Korea continues to navigate the complexities of the digital asset landscape, the FSC’s proactive measures signal a robust approach to ensuring a fair and transparent market for all participants.

For more updates on South Korea’s evolving financial regulations and the cryptocurrency market, stay tuned.