South Korea’s FSS launches AI system to monitor crypto market manipulation in real time

South Korea’s Financial Supervisory Service (FSS) launched an AI-powered real-time monitoring platform on Aug. 20 to detect unfair trading and price manipulation in crypto markets. The system uses generative AI and machine learning to spot patterns such as “racing horse” manipulation and “cage” manipulation. It also applies Benford’s law and machine-learning models to identify wash trading and group trading. The platform monitors YouTube, online forums and private chat groups in real time, with a focus on front-running, false information, and attempts to push retail investors into coordinated buying. FSS investigators will review the AI-generated reports before deciding whether to begin enforcement procedures. The agency said it will later add tools to track fund flows across exchanges and monitor on-chain activity. Markus Levin, co-founder of XYO, said regulatory AI may face risks tied to data accuracy, operational boundaries and false positives.