South Korea's Financial Supervisory Service (FSS) said on Feb. 9 it will launch a targeted investigation into high-risk crypto market manipulation tactics, and separately plans to impose punitive administrative fines for information technology (IT) failures at financial companies. The move marks the latest regulatory push in the country to tighten oversight of digital assets and consumer protection.
Manipulation Methods Under Scrutiny: Whale Trades, API Abuse
The FSS listed specific tactics it will focus on: large-scale whale trades, exchange withdrawal halts used to manipulate prices, API-based order manipulation, and coordinated social-media misinformation campaigns. The regulator said it will deploy AI-driven analytics to flag suspicious rapid price spikes at the minute level and automatically identify suspect groups, aiming to improve detection efficiency.
Digital Asset Basic Act in the Works
Beyond the probe, the FSS formed a task force to prepare the Digital Asset Basic Act, which will cover disclosure requirements, licensing manuals for digital asset operators and stablecoin issuers, and rules to separate and disclose exchange fees to promote consumer choice and fair competition. These moves align with South Korea's broader Digital Asset Framework.
Consumer Protection and IT Security Measures
On consumer protection, the FSS plans to expand on-site response teams, create a special investigative liaison, and build AI-based early warning systems using telecom and financial data to combat illegal lending and voice phishing. It will also reorganize a complaint center for victim relief and establish rapid police handoff procedures. In the IT security realm, the regulator will introduce punitive administrative fines for IT incidents, raise CEO and CISO security responsibilities, require information-security disclosures, activate an integrated threat-monitoring system this month, and issue AI ethics and risk-management guidance for financial use.