South Korea Watchdog Warns of Rising Crypto Price Manipulation Using APIs

South Korea’s Financial Supervisory Service urged investors to be cautious as cases of unfair trading using APIs in the virtual-asset market increase.

Yonhap News reported on May 13 that the regulator said application programming interfaces, or APIs, used for automated trading are increasingly being exploited to artificially inflate trading volume or manipulate prices. API-based trading currently accounts for about 30% of total trading value in the virtual-asset market, it said.

One common tactic involves repeatedly placing small market buy and sell orders to make trading appear active, then entering separate high-priced buy orders to push prices higher. Once retail buying emerges, the trader sells existing holdings to realize gains.

The regulator also identified another method in which a trader places sell orders above a target price in advance, then uses APIs to repeatedly submit high-priced buy orders to artificially drive the market higher.

It also detected cases in which traders repeatedly placed and canceled spoof orders to create the appearance of heavy buying interest, or distorted market conditions through collusive trading across multiple accounts.

The FSS warned that indiscriminate use of automated trading code shared in online communities or on social media could unintentionally amount to unfair trading.

It added that investors should avoid chasing price moves when prices and trading volume surge within a short period without a clear reason, as that could signal price manipulation through API abuse.

The regulator said it plans to respond strictly through targeted investigations if it detects suspicious trading involving APIs.