South Korea’s Financial Services Commission (FSC) has referred two suspected cryptocurrency market manipulation cases to prosecutors, marking another step in its crackdown on unfair trading practices. The referrals were approved during the regulator’s 12th regular meeting on July 1, 2026, and both cases involve alleged schemes that distorted prices and harmed retail investors.
The first case centers on a large-scale investor, often described as a whale, who allegedly spent tens of billions of Korean won over approximately two months to control the price of a token listed on both domestic and overseas exchanges. Investigators found that the suspect accumulated nearly half of the token’s global circulating supply, gaining a dominant market position. The scheme involved first driving up the token price on overseas exchanges, which then influenced prices on South Korean platforms and lured local investors. While the suspect incurred losses overseas, he secured larger gains on domestic exchanges, leaving losses concentrated among Korean retail traders.
The second case involves a trader accused of manipulating a so-called kimchi coin through ultra‑short‑term tactics. Authorities say the suspect used API channels to repeatedly place small market buy and sell orders within seconds, creating a false impression of active trading. Additionally, the individual submitted high‑priced limit buy orders via a web platform to further lift the token’s price. Once other buyers entered the market, the suspect allegedly sold holdings in portions to lock in profits. Regulators noted that small‑cap tokens with thin order books are particularly vulnerable to such manipulation.
The FSC warned investors to stay away from virtual assets whose prices and trading volumes surge without reasonable cause, stressing that whale‑led pump‑and‑dump schemes often end with sharp price drops once large holders exit. The regulator also announced plans to upgrade its warning systems for concentrated trading activity and improve investigative tools to detect unfair trading faster.
These referrals follow similar arrests in January 2025 related to price manipulation on Bithumb and are part of Seoul’s broader effort to enforce the Virtual Asset User Protection Act and strengthen investor safeguards in the crypto market.
