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South Korean authorities have charged two groups with orchestrating crypto price manipulation schemes using automated trading bots and coordinated fake orders, according to the Financial Services Commission.
The suspects allegedly deployed API programs that executed trades several times per second to create the illusion of high liquidity, while separately accumulating positions worth tens of billions of Korean won before artificially pumping prices.
The cases mark the latest escalation in South Korea’s regulatory crackdown, which has frozen $61.4 million in suspected fraud-linked crypto assets since 2019.
In the second FSC crypto manipulation case, the suspects deployed automated trading programs—known as APIs—to simulate heavy market activity. These programs placed buy and sell orders several times per second, creating the illusion of high liquidity and investor interest.
The FSC revealed that the perpetrators also placed manual high-priced buy orders to reinforce the illusion of a price rally. This deliberate manipulation exploited the visual display mechanics of crypto exchanges, where flashing red lines often suggest a surge in market activity.
“The suspects took advantage of the typical user perception that a flashing red line indicates active trading,” — Financial Services Commission statement.
The illusion misled ordinary investors, many of whom believed genuine market growth was occurring.
The regulator cautioned investors to remain vigilant whenever low-liquidity cryptocurrencies experience sudden price surges or volume spikes.
“Anyone who manipulates prices through high-price buy or sell orders will face sanctions under the Virtual Asset User Protection (VAUP) Act,” — FSC spokesperson, in an official release.
As part of its broader anti-fraud efforts, the FSC disclosed that it has frozen approximately $61.4 million worth of digital assets across multiple exchanges over the past six years — all linked to crypto-related crimes and violations of the VAUP Act.
According to a report submitted to lawmaker Wi Seong-gon’s office, most of these freezes stem from suspected market fraud. Bithumb accounted for the largest share, with $37.4 million in frozen assets following its 2020 suspension of withdrawals related to 8,666 fraud cases.
Coinone, another major platform, had $4.4 million frozen across 755 cases, while Korbit saw $296,000 locked across 529 incidents. The Gopax exchange also had $222,000 frozen in about 280 cases.
“The cumulative amount demonstrates our sustained effort to sanitize South Korea’s crypto ecosystem,” — FSC report excerpt.
To further tighten controls, the government has approved a revision bill to the Enforcement Decree of the Special Act on the Refund for Loss, expanding financial institutions’ responsibility to prevent crypto-related losses.
This update complements South Korea’s recent reforms under the Act on Reporting and Use of Specific Financial Transaction Information, which mandates strict anti-money laundering (AML) protocols, real-name accounts, and exchange registration.
The revised decree, which will take effect six months after promulgation, reinforces the FSC crypto manipulation case crackdown by empowering regulators to monitor, freeze, and prosecute offenders more effectively.
These enforcement efforts come as South Korea updates its crypto regulations to cover stablecoins, lending, mining, and investor protection—creating one of the most comprehensive frameworks in Asia.
The FSC emphasized that coordinated manipulation schemes not only erode investor confidence but also threaten market stability. The FSC crypto manipulation case files now transferred to law enforcement represent a decisive moment in the nation’s evolving digital asset oversight strategy.
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