South Korea Flags 40 Crypto Manipulation Cases, $940K Average Illicit Gain in 2 Years

South Korea’s Financial Services Commission (FSC) has investigated more than 40 cases of unfair crypto trading over the past two years, referring 30 of them to investigative agencies and identifying 25 suspects. The average illicit gain per case reached roughly 1.4 billion Korean won, or about $940,000, according to figures FSC Chairman Lee Eog-won posted on the second anniversary of the country’s Virtual Asset User Protection Act.

The law took effect in July 2024, and Lee used the milestone to publish an enforcement scorecard covering market manipulation, wash trading and fraudulent crypto trading schemes uncovered since then. The gap between the 40-plus cases flagged and the 30 formally referred suggests roughly a quarter were resolved administratively or dropped before reaching prosecutors, while the remainder moved into criminal channels.

What the numbers signal

A near-$1 million average payout per manipulation case, multiplied across 25 identified suspects, points to organized rather than opportunistic abuse — the kind of coordinated pump-and-dump or wash-trading activity that regulators have struggled to police in thinly traded token pairs. The FSC’s willingness to publish these figures two years into enforcement also signals it now has enough case history to benchmark typical illicit-gain size, a data point traders and exchanges can use to gauge how aggressively Seoul is chasing manipulation relative to other jurisdictions.

Lee framed the anniversary as evidence the law achieved its core aim. “Today marks the second anniversary of the enactment of the ‘Virtual Asset User Protection Act…’ It was a meaningful time that brought the virtual asset market, which was outside the institutional framework at the time, into the fold of the law and created an opportunity to establish a user protection system for virtual assets,” he said, according to a machine translation of his post.

Why the law matters to traders

The Virtual Asset User Protection Act forces licensed virtual asset service providers (VASPs) to legally segregate user deposits and crypto holdings from corporate funds, and to keep client cash deposits at banks rather than commingled accounts. That structural separation is designed to prevent the kind of exchange insolvency or misuse of customer funds that has hit users elsewhere in the industry.

Beyond custody rules, the legislation specifically targets insider trading, wash trading and market manipulation, while widening the FSC’s authority to supervise and inspect exchanges directly. For everyday holders on Korean platforms, that means a regulator with expanded legal teeth to pursue manipulators, plus mandated separation of their assets from an exchange’s own balance sheet.

Next steps for enforcement

Lee said the FSC intends to lean further on artificial intelligence for market surveillance going forward. “We will continue to enhance market surveillance investigation and monitoring systems based on AI, and proactively respond to high-risk areas,” he added, signaling that the pace of case detection could accelerate as automated monitoring tools mature.

For investors trading on South Korean exchanges, the two-year tally offers a rare, quantified look at how much manipulation regulators believe they’ve caught — and how much financial damage, on average, each scheme inflicted before being shut down.

Sources

• beincrypto.com
• cointelegraph.com