The FSC approved referrals for two cases: a whale controlling half a token's supply and API-based manipulation of a kimchi coin, with losses concentrated on Korean investors.
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South Korea's financial watchdog has referred two suspected crypto market manipulation cases to prosecutors, marking a fresh push to enforce the country's year-old digital asset law. The Financial Services Commission said it approved the referrals at its July 1 meeting.
One case centers on a large token holder – a whale – who allegedly used tens of billions of Korean won over two months to control the price of a token listed on both domestic and overseas exchanges. The FSC said the suspect bought nearly half of the token's global circulating supply, creating artificial buying pressure and a dominant market position.
Authorities said the suspect first pushed the token price up on overseas exchanges. That move then influenced the same token on South Korean platforms, drawing local retail investors into the market. The FSC said the suspect lost money on the overseas leg but made larger gains on domestic exchanges, leaving losses concentrated among Korean investors.
The second case involves a different suspect accused of ultra-short-term manipulation of a so-called kimchi coin. The FSC said the suspect used an API channel to place repeated small market buy and sell orders within seconds. The suspect also placed high-priced limit buy orders through a web channel to lift the token's price. After attracting other buyers, the suspect allegedly sold holdings in portions to lock in gains. Regulators said small-cap tokens with thin order books can move sharply when a few accounts dominate trading.
“Investors should refrain from chasing virtual assets whose prices and trading volumes surge without any reasonable cause,” the FSC said. The regulator also warned that whale-led pump-and-dump activity can cause sharp price drops once large holders sell.
The referrals come after South Korean prosecutors arrested two people in January 2025 over alleged price manipulation on Bithumb, also involving violations of the Virtual Asset User Protection Act. The country created a dedicated crypto crime investigation unit as it prepared to enforce its first comprehensive framework for investor protection.
The FSC has also moved to tighten rules for financial influencers who promote stocks and crypto, requiring clearer disclosures on asset holdings and compensation when they discuss investment products.
The FSC said it will improve warning systems tied to concentrated trading by small groups of accounts. It also plans to upgrade its investigation tools so regulators can detect unfair trading faster and protect users from similar schemes.
The move adds to a wave of global enforcement actions against crypto market abuse. In the UK, 1,700 investors have filed a lawsuit against Binance and its founder Changpeng Zhao for derivatives sold without proper authorization. Read more: 1,700 UK investors sue Binance, CZ for $200M over derivatives.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.