South Korea’s financial watchdog just sent a message to crypto market manipulators: we’re watching, and we’re coming.
The Financial Services Commission (FSC) referred two cases of alleged cryptocurrency market manipulation to prosecutors on July 1, marking one of the most aggressive enforcement actions under the country’s relatively new Virtual Asset User Protection Act (VAUPA). One case involves a whale investor accused of cornering up to 50% of the global supply of a specific crypto asset. The other targets ultra-short-term manipulation of so-called “kimchi coins,” tokens that trade primarily on Korean exchanges.
The whale’s playbook
Over approximately two months, a single investor allegedly poured tens of billions of won into a crypto asset that was dual-listed on both domestic and international exchanges. The whale reportedly amassed a controlling position, acquiring as much as half the global supply of the targeted asset. Once the position was established, the trader allegedly used “linkage strategies” across domestic and international exchanges to artificially inflate prices in Korean markets. The FSC says the scheme resulted in substantial profits for the whale at the expense of everyday Korean investors.
