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South Korean authorities have indicted suspects for unfair crypto trading involving artificial price inflation and subsequent token dumping, known as a pump and dump.
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South Korean financial authorities have taken action against alleged unfair cryptocurrency trading practices under the country’s investor protection regime.
On Jan. 16, South Korea’s Financial Services Commission (FSC) reported the first case of unfair crypto trading practices under the Virtual Asset User Protection Act, which took effect in July 2024.
South Korea’s Virtual Asset Protection Act requires local virtual asset service providers (VASPs) to report abnormal crypto transactions and investigate unfair trading patterns.
In the first reported case under the act, authorities charged suspects who allegedly manipulated prices in brief intervals of about 10 minutes, enabling them to earn hundreds of millions of Korean won over one month.
Suspect artificially inflated the price and sold crypto within minutes
According to the FSC, the perpetrator violated South Korea’s crypto investor protection laws by placing multiple buy orders to inflate the price of a cryptocurrency before dumping a large amount of assets bought in advance — known in crypto as a “pump and dump.”
“The suspect’s price manipulation process was often completed within 10 minutes. During this process, the prices of virtual assets in a sideways trend showed a pattern of sharp rise and a subsequent sharp decline,” the regulator said.
With growing concerns over unfair trading as transaction volumes increase, the FSC plans to further enhance investigation systems, promote monitoring by VASPs and consider improvements to market structure to ensure transparency and a fair trading order, it added.
South Korea continues to discuss corporate crypto investment
The report comes amid South Korea inching closer to potential approval of corporate crypto trading accounts following the second Virtual Asset Committee meeting on Jan. 15.
The FSC is also expected to hold a meeting to decide punitive measures for major local exchange Upbit, which was allegedly identified as a violator of at least 500,000 potential Know Your Customer breaches in 2024.
Related: US, Japan, South Korea warn of rising North Korean crypto hacking threats
South Korean authorities have also been progressing with a long-running court case involving Lee Jung-hoon, the former chair of major local crypto exchange Bithumb, who is believed to be the actual owner of the platform.
On Jan. 16, Lee was reportedly acquitted in an appeal trial related to a large-scale customer data breach on Bithumb. The data leak occurred in 2017, affecting 31,000 user accounts on Bithumb, reportedly resulting in almost $7 million in user funds being stolen.
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This article first appeared at Cointelegraph.com News
