South Korean financial authorities have investigated more than 40 cases of suspected unfair crypto trading and market manipulation since the country introduced its Virtual Asset User Protection Act in July 2024, highlighting the government’s growing enforcement focus on the digital asset sector.
Financial Services Commission (FSC) Chair Lee Eog-won disclosed the figures on the second anniversary of the legislation, saying authorities had reported or referred around 30 cases to investigative agencies and identified 25 suspects.
According to Lee, the cases involved average estimated illegal gains of approximately 1.4 billion Korean won, or about $940,000.
Two years of stronger crypto oversight
The Virtual Asset User Protection Act marked an important step in bringing South Korea’s crypto industry under a more formal regulatory framework.
The legislation introduced stronger protections for customers using virtual asset service providers (VASPs), including requirements for platforms to separate customer deposits and crypto assets from their own corporate holdings. Customer fiat deposits must also be held through banks, helping reduce the risks associated with the misuse of client funds.
The law also strengthened oversight of activities such as insider trading, wash trading, fraudulent transactions, and market manipulation, while expanding the FSC’s authority to supervise and investigate crypto service providers.
South Korea plans to expand AI-powered market surveillance
South Korean regulators now plan to strengthen enforcement further by integrating artificial intelligence into their monitoring and investigation systems.
Lee said authorities would continue improving AI-based market surveillance, investigation, and monitoring capabilities, with greater attention directed toward high-risk areas of the crypto market.
The move signals a broader shift in South Korea’s regulatory approach. As crypto becomes more integrated into the financial system, regulators are moving beyond establishing basic rules toward building more sophisticated systems capable of detecting suspicious trading behavior at scale.
The more than 40 investigations conducted over the past two years show that enforcement is becoming an increasingly important part of South Korea’s crypto regulatory framework, with technology-driven surveillance likely to play a larger role in identifying market abuse going forward.
