South Korea's Financial Supervisory Service (FSS) has issued a stark warning against automated trading manipulation, revealing that API-based programmatic trading now accounts for approximately 30% of the country's cryptocurrency market volume. The regulator announced a special investigation targeting accounts with abnormal API trading patterns, while cautioning retail investors to remain vigilant.
Soaring API Trading Triggers Scrutiny
The FSS highlighted that the rapid growth of algorithmic trading via APIs has created new opportunities for market abuse. High-frequency trading bots now execute millions of orders daily. The watchdog identified three major manipulative practices: wash trading (simulating volume through self-trades), spoofing (placing large fake orders to mislead others), and coordinated multi-account schemes designed to artificially move prices.
Special Investigation Underway
In response, the FSS will launch a special investigation team that uses advanced data analytics to scan exchange API logs. Accounts exhibiting excessive trade frequency, rapid inter-account fund transfers, or clusters of tiny orders around price swings will be flagged. The regulator warned that violators could face exchange API suspensions and criminal referral.
Advice for Investors
The FSS specifically warned investors to avoid assets that show sudden price and volume surges without clear fundamental reasons. Such abnormal movements often signal orchestrated manipulation rather than genuine interest. The regulator urged investors to conduct thorough research and report suspicious trading patterns through official channels.
Broader Regulatory Context
South Korea remains one of the most active crypto markets globally, but also a hotspot for manipulation complaints. The FSS's aggressive stance aligns with the government's long-term push to tighten crypto oversight. While the probe may temporarily reduce algorithmic trading volumes, it is expected to enhance market integrity and attract institutional confidence.