South Korea's Financial Services Commission (FSC) has filed lawsuits against two cases of crypto market manipulation during its 12th regular meeting, as reported by Daily Economy. The first case involves a 'whale' investor who spent hundreds of billions of South Korean won to acquire approximately half of the global circulating supply of a specific crypto asset. The investor then artificially inflated the price on an overseas exchange and exploited cross-exchange price correlation to sell at a premium on domestic Korean exchanges, causing losses to local retail investors who bought into the hype.
The second case targets 'kimchi coins' — a term for Korean-focused altcoins. The suspect used an API to repeatedly submit market orders within one second, creating a false impression of high trading activity. Simultaneously, the suspect placed high-priced buy orders on the web interface to artificially boost the price. Once retail buyers flooded in, the suspect systematically sold off holdings to realize profits. This combination of wash trading (volume manipulation) and pump-and-dump through API automation is notoriously difficult to detect without sophisticated surveillance tools.
In response, the FSC warned investors to be cautious of crypto assets that experience sudden price surges or volume spikes without fundamental reasons, as these often signal manipulation. The commission announced plans to strengthen disclosure requirements for large holders (whales), mandating real-time reporting when an address holds a significant percentage of a token's circulating supply. Additionally, the FSC will upgrade its market early-warning system to automatically flag abnormal high-frequency order patterns and inter-exchange price deviations. These legal actions mark a shift in South Korea's regulatory approach from post-hoc punishment to proactive prevention and real-time intervention in the crypto market.