South Korea Flags 25 Crypto Market Manipulation Suspects in First Two Years of Investor Protection Law

Two Years Since the Virtual Asset Investor Protection Act Took Effect

More Than 30 Unfair Trading Cases Referred or Reported

25 Suspects Averaged $1 Million in Illicit Gains

South Korea’s financial authorities identified 25 suspects while investigating more than 40 unfair trading cases in the two years since the Virtual Asset Investor Protection Act took effect. Most involved market manipulation that sharply drove up virtual-asset prices in a short period. The average illicit gain from the schemes was 1.4 billion won, or about $1 million.

The authorities released the findings on July 19. The Virtual Asset Investor Protection Act, which took effect on July 19, 2024, was introduced to combat unfair trading in the virtual-asset market. Like South Korea’s capital-markets law, it bans the use of material nonpublic information, price manipulation, other fraudulent trading practices and trading in self-issued virtual assets.

Since the law took effect, authorities have completed investigations into more than 40 unfair trading cases. More than 30 were referred or reported to investigative agencies. Most of the cases handed over involved price manipulation, including efforts to push up virtual-asset prices or make trading appear more active than it was.

Authorities cited so-called “racehorse” and “penning” tactics as representative manipulation methods. A “racehorse” scheme involves placing concentrated orders when price-change statistics are reset to draw in buyers. “Penning” refers to artificially driving up prices on exchanges where virtual-asset deposits and withdrawals have been temporarily blocked.

Authorities also used an emergency fast-track procedure with investigative agencies. The first case came in October 2024. After receiving the exchange’s review results, authorities investigated within two months and referred to prosecutors a case involving price manipulation through spoofed API orders. The suspect, identified only as A, was found to have placed hundreds of thousands of orders a day.

Authorities also uncovered a manipulation case involving a so-called whale investor who deployed large sums of money. In September 2025, the Financial Services Commission referred suspect B to prosecutors on allegations that the trader used tens of billions of won to drive up prices and then sold holdings for illicit gains worth billions of won. B was found to have secured as much as about half of the global circulating supply of a specific virtual asset.

Another case involved fraudulent trading through the spread of false information. A representative example was the September 2025 referral of people tied to a meme-coin issuer following a Financial Services Commission resolution. Investigators found they bought the virtual asset in advance, spread false information on social media to attract buyers and then sold their holdings for illicit gains worth hundreds of millions of won.

The 25 suspects identified so far generated average illicit gains of 1.4 billion won, or about $1 million. Eight cases involved illicit gains of 500 million won to 5 billion won, a range punishable by at least three years in prison. One case involved more than 5 billion won, which carries a minimum prison term of five years. Because ultra-short-term manipulation schemes tend to target multiple tokens, the average case involved eight assets.

Financial authorities said they will continue to respond strictly to conduct that undermines order in the virtual-asset market. They said they have set up a real-time market monitoring system and an artificial intelligence-based market surveillance framework. Exchanges have also built a standing system to identify suspicious trading quickly and notify financial and investigative authorities.

The authorities are also reviewing whether to include in the second phase of digital-asset legislation a system to freeze accounts and prevent the concealment of illegal profits, as well as a reporting and reward program for unfair trading cases. “We will devote all our capabilities to establishing a fair and transparent market order that users can trust,” a financial authority official said.

Park Si-on, Hankyung.com reporter ushire908@hankyung.com