Operation Groups Scammed 7.1 Billion Won but Only 800 Million Forfeited... Reports Hit Record High This Year [Coin Lawless Zone] ⑤

Manipulation Groups Rampant Amid Lenient Penalties
Call for Stock Market-Level Surveillance System

"'Coin A is scheduled to be listed around April 28, 2023, and if you invest now, you can make a profit,' he lied. In reality, however, Coin A was a worthless coin that had no actual trading, but through market manipulation, it was made to appear as if it was trading at around 1,300 won. It was expected that the price would inevitably plummet once the lock-up period ended." (Daejeon District Court, June 9, 2025)

Amid ongoing market manipulation scams in the virtual asset market, reports of 'suspicious operations' have surged dramatically this year. Getty Images

Amid ongoing market manipulation scams in the virtual asset market, reports of 'suspicious operations' have surged dramatically this year. Even after the enforcement of the Virtual Asset User Protection Act, manipulation groups remain active, but both regulatory administrative actions and prosecutors' ability to prove criminal activity are showing their limitations.

According to data submitted to Assemblyman Min Byungdeok's office by the Financial Supervisory Service on July 10, reports of unfair trading in virtual assets dropped from 55 cases in 2024 to 30 in 2025; however, 54 cases were already filed in just the first five months of this year, surpassing last year's total. Notably, of those 54 cases, 50 involved allegations of market manipulation, indicating that market disruption by manipulation groups is intensifying. At this rate, the number of reports is expected to reach a record high by the end of the year.

In contrast, the Virtual Asset Division of the Financial Services Commission launched investigations into only 10 cases of unfair trading between July 2024, when the law was enacted, and May this year. Of the eight cases that were concluded, more than half—five cases—were closed internally without further action. Only three cases were formally referred to or reported to the prosecution.

In the judiciary's first ruling on a violation of the Virtual Asset User Protection Act, the prosecution's failure to prove criminal unjust enrichment was revealed. The 14th Criminal Division of the Seoul Southern District Court (Presiding Judge Lee Junghee) sentenced Lee, the CEO of Coin B, who was indicted on charges of violating the Virtual Asset User Protection Act, to three years in prison, a fine of 500 million won, and a forfeiture of approximately 846 million won on February 4. Taking into account that Lee had been released on bail after being indicted in custody and had faithfully attended trial, the court decided not to revoke bail, thus exempting him from immediate imprisonment. Kang, a former employee of the company who was indicted as an accomplice, received a two-year prison sentence suspended for three years.

They were accused of artificially inflating the trading volume of the coin and repeatedly submitting fake buy orders using an automated trading program between July 22 and October 25, 2024, thereby manipulating the market price and obtaining approximately 7.1 billion won in unjust profits. The coin's daily trading volume, which averaged 160,000, skyrocketed to 2.45 million the day after the scheme began. Of this, 89% was found to be from Lee's own trading.

The court pointed out, "This is a serious crime that undermines the fair price-setting function of the virtual asset market and damages investor trust," and added, "It creates unpredictable risks for an unspecified number of investors, which is highly blameworthy." However, while the court found Lee and his accomplices guilty of market manipulation, it ruled not guilty with respect to the 7.1 billion won in unjust profits due to insufficient evidence presented by the prosecution. This type of not-guilty ruling, called 'reason-based acquittal,' means that although the overall guilt is recognized, the judgment specifies in the reasoning that certain charges legally related to the main offense are not separately sentenced as not guilty.

The prosecution filed an immediate appeal just six days after the verdict, arguing that the first-instance ruling failed to order full forfeiture because the exact amount of unjust profits obtained by the defendants could not be precisely calculated, thus resulting in a misunderstanding of the law, a misjudgment of the facts, and an inappropriate sentence. As the number of reports surges while both regulatory and judicial responses lag behind, calls are growing to overhaul the market surveillance system itself.

Experts agree that, to eradicate unfair trading, a real-time surveillance system at the level of the stock market should be introduced, and technical analysis capabilities and global cooperation should be significantly strengthened. Hwang Se-woon, Senior Research Fellow at the Korea Capital Market Institute, said, "Just as the stock market has a market surveillance committee, a systematic approach to continuously monitor abnormal trading in real time is essential in the virtual asset market. In particular, actively adopting artificial intelligence (AI) technology to upgrade suspicious transaction detection systems would enable much more effective screening than manpower-based monitoring."

An industry insider in the virtual asset sector, who requested anonymity, commented, "If authorities continue to close cases internally with findings of no charges, market vigilance could weaken. Therefore, it is essential to strengthen on-chain data analysis capabilities and expand information sharing with overseas supervisory authorities. In addition, continuously enhancing concrete standards of proof and investigative authority concerning the use of undisclosed information and market manipulation is necessary to ensure the effectiveness of law enforcement."

This content was produced with the assistance of AI translation services.