South Korean financial authorities have investigated more than 40 cases of unfair crypto trading in the first two years of the Virtual Asset User Protection Act, according to Financial Services Commission Chair Lee Eog-won. The law took effect on July 19, 2024, marking a major step in bringing the crypto market under a formal legal framework.
Of the cases, more than 30 were referred to investigative agencies and 25 suspects identified. Lee stated the average unlawful gains reached about 1.4 billion Korean won, roughly $940,000, per case. The cases cover suspected market manipulation and other fraudulent trading activity.
The Virtual Asset User Protection Act mandates that virtual asset service providers keep customer funds separate from company assets and hold user deposits with banks. It also empowers regulators to inspect providers and crack down on insider trading, wash trading, and market manipulation. Recent referrals include a trader accused of buying close to half a token’s circulating supply before selling into rising demand.
Lee said regulators plan to enhance market surveillance using artificial intelligence and focus on high-risk areas. “We will continue to enhance market surveillance, investigation and monitoring systems based on AI,” he wrote. Meanwhile, South Korea is expanding digital asset rules, including a proposal to bring crypto under a new state asset management framework. The Financial Intelligence Unit has referred about 40 unregistered operators to law enforcement.
