South Korea Targets Crypto Whales in Market Manipulation Crackdown

The first case involves a major token holder who allegedly deployed tens of billions of Korean won to capture nearly half of a digital asset’s global supply. By aggressively driving up prices on overseas exchanges, the suspect created a ripple effect that drew unsuspecting local investors into the market. While the individual reportedly incurred losses on foreign platforms, they secured significant profits domestically, effectively shifting the financial burden onto South Korean participants.

A second investigation targets the manipulation of "kimchi coins"—small-cap tokens with limited liquidity. Regulators found that a suspect utilized API-driven trading to execute rapid-fire, small-volume orders, creating the illusion of heavy market activity. By layering high-priced limit orders, the operator artificially inflated token values before offloading holdings to retail buyers. The Financial Services Commission has cautioned that such pump-and-dump schemes remain a primary threat to market stability, particularly for assets lacking clear fundamental drivers.

These enforcement actions align with Seoul’s broader push to solidify the Virtual Asset User Protection Act. Having already established a specialized crypto crime unit following high-profile arrests at exchanges like Bithumb, authorities are now upgrading surveillance systems to detect concentrated trading patterns. The regulator intends to refine its automated alert mechanisms to identify unfair practices before they impact the broader retail investor base.