South Korea’s Financial Services Commission referred two separate cases of allegedly artificially influencing prices in the cryptocurrency market to the prosecutor’s office on July 1. While one of the files is based on the claim that price differences between local and foreign exchanges were taken advantage of, the other contains the suspicion of creating the appearance of market movement with high-frequency orders in low-liquidity local tokens.
Two different suspicions of manipulation
In the first filing, it was stated that an investor who spent tens of billions of won for about two months collected nearly half of the global circulating supply of a token traded both in South Korea and on platforms abroad. The Commission stated that after such an accumulation, the price first moved up in foreign exchanges, and this movement was also reflected in domestic prices due to arbitrage transactions and automatic systems between platforms.
Mini dictionary: Arbitrage is buying and selling the same asset by taking advantage of the price difference in different markets. Since automatic systems in the crypto market can close these differences in a very short time, a harsh movement on one platform can quickly spread to other exchanges.
According to the commission’s evaluation, the suspicious investor incurred losses in foreign transactions but made higher profits from sales within South Korea. In this table, it was noted that the main burden fell on individual investors who made purchases by following rising prices.
The Commission warned that transactions concentrated on a single large investor or a limited number of accounts in assets whose prices and transaction volumes increase suddenly without a clear reason carry serious risks.
Allegation of bot use in Kimchi coin transactions
The second file covers tokens that are largely traded only on local exchanges and are referred to as “kimchi coins” in the market. The low liquidity of these assets paves the way for sharp price movements even with relatively limited capital.
Within the scope of the investigation, it was stated that the suspect collected a certain token in advance, then entered many market buy and sell orders within a second via API access, creating the impression of intense transaction. At the same time, it was reported that a buy order was placed on the website at levels more than ten times the lowest selling price.
It was alleged that the suspect made a profit by selling his assets piece by piece, after external buyers entered the market, mistaking the momentum for a real increase in demand. It was reported that the Financial Supervisory Service discovered this scheme as a result of a planned investigation. The Financial Supervisory Service is among the main public authorities that supervise capital markets and financial institutions in South Korea.
New warnings from the regulatory agency
The Commission warned individual investors not to pursue price and volume jumps for which the reason is not clear. It was emphasized that sudden sales, especially in assets where the transaction volume is concentrated in a single large wallet or a small account group, could lead to heavy losses for investors who are late.
The board plans to strengthen warning systems that indicate when transactions in a particular asset are concentrated in a small number of accounts. It is also aimed to expand the disclosure obligations regarding the collective savings and sales of large investors.
Inspection steps in the markets have become more frequent
South Korean regulators have increased surveillance on the crypto market through 2026. In April, the commission ordered the country’s five major exchanges to reconcile their internal records with actual wallet balances every five minutes, following a $40 billion payment error on Bithumb in February.
In the same month, standard withdrawal delay rules also came into force after it was determined that 59 percent of fraud-related crypto transactions detected between June 2025 and September 2025 took advantage of exception differences between exchanges. In January, the Commission also announced a framework for publicly traded companies and registered professional investors to purchase crypto assets for the first time since 2017; Accordingly, the amount that can be held will be limited to 5 percent of the equity capital.
