Financial Authorities Report and Refer Four Cases of Virtual Asset Price Manipulation and Unfair Trading

Individuals suspected of unfair trading practices in the virtual asset market have been reported or referred to investigative agencies.

On September 23, the Financial Services Commission and the Financial Supervisory Service announced at a regular meeting that they had resolved to file complaints and notify investigative agencies regarding suspects involved in unfair trading incidents in the virtual asset market. There are a total of four cases: three involving ultra-short-term price manipulation and one case of unfair trading and price manipulation by executives and employees of a virtual asset management company.

In two cases of short-term price manipulation, siblings referred to as Mr. A and Mr. B were found to have manipulated prices of multiple virtual assets using the same methods and were reported to investigative authorities. According to financial regulators, they rapidly bought up large quantities of assets, then used automated trading programs (APIs) to repeatedly place market buy and sell orders for small amounts in the same quantity. This induced buying pressure and raised prices by placing limit buy orders at higher prices. Afterward, they made unfair profits by selling the virtual assets at their desired prices.

In another case of short-term price manipulation, Mr. C was prosecuted for alleged price manipulation using accounts under other people's names. He would pre-purchase highly volatile assets, use his own account to place limit buy orders at high prices to boost the price, and conduct high-frequency, small-scale API trades through accounts under other people's names to induce further trading. In this process, he would submit sell orders in advance at high prices to raise the price and profit unfairly by having the sell order executed at the elevated price.

Another case involved employees of a virtual asset issuing foundation who inflated trading volume through wash trading to qualify for a large exchange listing. After failing to list their managed virtual assets on a domestic exchange, they listed them on a mid-sized exchange. They then artificially boosted trading volumes through wash trading to falsely meet listing maintenance requirements. The group hired professional traders and manipulated volumes by using borrowed-name accounts, luring investors and using the manipulated trading data to apply for listing on a major exchange. It was also found that the issuing foundation was a paper company established in a tax haven, and the major individuals listed in the foundation’s white paper were either difficult to verify or fictitious.

A Financial Services Commission official stated, "Financial authorities will strengthen surveillance of abnormal trading activities similar to those uncovered in this action, and will take strict measures when unfair trading practices are detected, thereby establishing a sound order in the virtual asset market."

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