South Korean financial authorities have initiated their first enforcement action under the Virtual Asset User Protection Act, targeting alleged unfair cryptocurrency trading practices. The Financial Services Commission (FSC) reported on January 16 that suspects have been charged with manipulating cryptocurrency prices through a “pump and dump” scheme, marking the inaugural case under the legislation enacted in July 2024.
The individuals involved allegedly placed multiple buy orders to artificially inflate the price of a cryptocurrency, creating a deceptive appearance of increased demand. Once the price was elevated, they sold off substantial holdings within approximately 10-minute intervals, causing sharp price declines. This manipulation reportedly yielded profits amounting to hundreds of millions of Korean won over a one-month period.
In response to these activities, the FSC emphasized its commitment to enhancing investigative systems and promoting vigilant monitoring by Virtual Asset Service Providers (VASPs). The regulator aims to improve market transparency and ensure fair trading practices by requiring VASPs to report abnormal transactions and scrutinize potential manipulative behaviors.
This development coincides with South Korea’s ongoing efforts to regulate the cryptocurrency market more stringently. Discussions are underway regarding the potential approval of corporate crypto trading accounts, and the FSC is expected to deliberate on punitive measures for major local exchange Upbit, which allegedly violated Know Your Customer regulations. These actions reflect the country’s dedication to fostering a secure and transparent environment for cryptocurrency transactions.
