South Korea has significantly tightened its oversight of the cryptocurrency market, investigating more than 40 cases of suspected market manipulation and unfair trading since the country’s landmark crypto legislation came into effect in July 2024. The update highlights the government’s ongoing efforts to build a safer and more transparent digital asset ecosystem while protecting investors from illegal market practices.
Financial Services Commission (FSC) Chair Lee Eog-won shared the figures while marking the second anniversary of the Virtual Asset User Protection Act, describing the legislation as a major step in bringing the country’s crypto industry under a formal regulatory framework.
South Korea Investigated More Than 40 Crypto Manipulation Cases
According to Lee Eog-won, South Korean financial authorities examined over 40 cases involving unfair trading practices during the past two years. Out of these investigations, 30 cases were either reported or referred to law enforcement agencies, leading to the identification of 25 suspects linked to illegal crypto trading activities.
The Financial Services Commission revealed that the average unlawful profit generated from these violations was approximately 1.4 billion Korean won, or nearly $940,000 per case.
The investigated activities included market manipulation, fraudulent trading schemes, insider trading, and wash trading—practices that can distort crypto prices and harm retail investors.
Speaking about the milestone, Lee said the Virtual Asset User Protection Act played a key role in bringing the cryptocurrency market into the country’s legal framework while laying the foundation for stronger investor protection.
Virtual Asset User Protection Act Strengthens Crypto Oversight
The Virtual Asset User Protection Act was introduced to improve the safety of cryptocurrency users and establish clear responsibilities for Virtual Asset Service Providers (VASPs).
Under the law, crypto exchanges and other VASPs must keep customer deposits and digital assets separate from their own company funds. Customer cash deposits are also required to be held in partner banks, reducing the risk of misuse and improving asset security.
The legislation also grants the Financial Services Commission greater authority to supervise crypto businesses and investigate illegal trading activities. By targeting insider trading, wash trading, and market manipulation, regulators aim to create a fairer and more transparent digital asset market.
Looking ahead, Lee said the FSC will continue strengthening its monitoring capabilities by using artificial intelligence to detect suspicious trading patterns and respond more effectively to high-risk activities. The regulator believes AI-powered surveillance will improve enforcement and help identify market abuse before it causes significant damage to investors.
South Korea’s latest enforcement figures demonstrate the country’s commitment to maintaining a well-regulated cryptocurrency market. As digital assets continue to gain mainstream adoption, authorities are expected to further enhance monitoring systems and tighten oversight to ensure investor protection and market integrity.
