South Korea has cracked down on a pump-and-dump scheme, accusing a suspect of rapid price manipulation under the country’s new crypto regulatory framework.
New Crypto Law in Action: Suspect Accused of Rapid Price Manipulation
South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) announced on Thursday that they have reported an individual suspected of manipulating cryptocurrency prices to prosecutors. This case marks the first instance handled under the new regulatory procedures established by the Virtual Asset User Protection Act, which took effect on July 19, 2024.
The case followed a structured process involving cryptocurrency exchanges, which flagged unusual trading activity, and financial authorities, which investigated and secured approval through the Virtual Asset Market Investigation and Deliberation Committee before reporting the matter for prosecution.
The individual is accused of engaging in a pump-and-dump scheme to generate illicit profits. According to financial authorities, the suspect first purchased large amounts of specific cryptocurrencies, then placed rapid and repetitive market buy orders to artificially inflate prices and trading volumes. This manipulation created the illusion of heightened market activity, misleading other investors into buying the asset. Once the price surged, the individual reportedly sold off their holdings entirely. The entire process often took place within 10 minutes, leading to sharp price volatility. Preliminary estimates indicate that the suspect may have earned several billion won in unjust gains over the course of one month.
Amid rising trading volumes and increasing price volatility in the cryptocurrency market, concerns about the proliferation of unfair trading practices like pump-and-dump schemes have intensified. Financial authorities warned investors of the risks associated with assets that experience sudden spikes in price and volume, cautioning that such assets may experience abrupt declines.
They also reaffirmed their commitment to enhancing market surveillance systems, encouraging cryptocurrency exchanges to strengthen their detection capabilities, and considering broader structural reforms such as implementing listing and disclosure standards to ensure a fairer and more transparent market.
Source: Bitcoin
