Financial Authorities Uncover 30 Cases of Unfair Coin Trading... Considering Account Freezes and Whistleblower Reward System

Financial authorities have forwarded more than 30 cases of unfair trading involving virtual assets to the prosecution and are considering new measures such as account freezes and whistleblower reward programs to eliminate unfair trading from the market.

The Financial Services Commission stated that following the implementation of the Virtual Asset User Protection Act, it had investigated around 40 cases of unfair trading in the virtual asset market over the past two years and referred over 30 of them to the prosecution for indictment or notification.

The majority of the cases handed over to prosecutors involved price manipulation schemes. These schemes included methods such as the "racehorse technique," where orders are concentrated at the point where the price increase rate resets, thereby attracting buying pressure by sharply raising prices in the short term, as well as "cage-type" methods, in which prices are artificially inflated by exploiting situations where virtual asset deposits or withdrawals are temporarily blocked on a specific exchange.

There were also other methods, such as short-term price manipulation through the lending of API keys, and cases involving "whales"—large-scale investors in virtual assets—who manipulated prices through coordination with overseas exchanges.

Some of the cases reported to the prosecution were related to unfair trading. Such unfair trading schemes often involved virtual asset issuers luring investors through social networking services (SNS) or exploiting price linkage between Tether (USDT) and Bitcoin within exchanges.

The average amount of unfair gains per case was approximately 1.4 billion won. There were eight cases where the amount of unfair gains ranged from 500 million to 5 billion won—levels subject to aggravated criminal punishment—and one case exceeding 5 billion won. The total number of suspects was 25, and the average number of virtual asset types involved per case was eight.

To address unfair trading of virtual assets, the financial authorities have established a real-time market monitoring system. They have also built an AI-based market surveillance and investigation system, which includes second-level analysis of price manipulation, automatic identification of suspect groups, and automatic extraction of suspicious intervals.

An official from the Financial Services Commission said, "Just as in the capital market, we plan to introduce a payment suspension system for accounts to prevent illegal profit concealment, as well as a whistleblower reporting and reward system for early detection of illegal activities, as part of the second phase of virtual asset legislation."

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