South Korea’s Financial Services Commission has referred two suspected cryptocurrency market manipulation cases for criminal prosecution, saying the individuals used separate trading schemes to distort digital asset prices and profit at the expense of retail traders. The referrals were approved at the commission’s 12th regular meeting on Wednesday.
Whale accumulation case centered on supply control
One investigation involves a suspected crypto whale who allegedly spent tens of billions of Korean won over nearly two months to influence the price of a token listed on both domestic and overseas exchanges. Authorities said the trader accumulated almost half of the token’s circulating supply, giving the position substantial influence over how much of the asset was available in the market.
According to the commission, the suspect pushed the token’s price higher on overseas exchanges before domestic investors entered. Once buying activity picked up, the trader allegedly sold large portions of the holdings. Retail participants were left facing heavy losses after the price fell back. Regulators said the scheme worked by tightening available supply first, then drawing in fresh demand during the price rise and exiting at much higher levels.
Second case focuses on API-driven wash trading signals
The second case targets a trader accused of using automated tools to create false market activity. Regulators said the individual repeatedly placed small market buy and sell orders through API channels to make trading appear active. On the surface, the market looked busy. The underlying demand may not have been real.
Authorities also said the suspect placed high-priced limit buy orders through a web-based trading platform. Those orders allegedly encouraged other investors to buy by suggesting stronger demand than actually existed. After other buyers entered, the trader reportedly sold crypto holdings through several transactions to lock in profits. The commission believes the activity distorted genuine market conditions and created a misleading picture of liquidity.
Regulator warns over unexplained price and volume spikes
Alongside the referrals, the Financial Services Commission urged investors to be cautious with digital assets showing unexplained jumps in price or trading volume. The regulator said such moves can point to manipulation rather than organic investor demand.
The commission also described pump-and-dump structures as especially damaging because organizers intentionally reduce available supply before selling large positions into rising markets. When prices reverse quickly, retail investors often take the losses.
South Korean regulators said they plan to strengthen warning systems for unusually concentrated trading activity and improve investigative capacity so suspicious transactions can be identified faster and addressed before investor losses widen.