Financial Authorities Report First Case of 'Coin Scam' to Prosecutors

Investigation Completed on 25th Last Month... Utilizing Fast Track
First Since Virtual Asset Act Enforcement in July
Price Manipulation Fraud Using API... Estimated Billions in Gains

Since the enforcement of the 'Virtual Asset User Protection Act' last July, the financial authorities have reported the first case of suspected virtual asset price manipulation to the prosecution.

On the 1st, the Financial Services Commission and the Financial Supervisory Service announced that they completed an investigation into a case of unfair trading (price manipulation) in the virtual asset market and reported it to the prosecution on the 25th of last month. The notification to the prosecution was made through the 'emergency action procedure (fast track)'.

This is the first case of unfair trading action reported by the financial authorities to the prosecution since the Virtual Asset User Protection Act came into effect on July 19. With the enforcement of the Virtual Asset Act, a legal basis for sanctions has been established, enabling the regulation of unfair trading in virtual assets, which had previously been a lawless area.

In this case, the suspect submitted large high-priced buy orders on a domestic virtual asset exchange with the intent to sell coins received from an overseas virtual asset issuing foundation at a high price. Then, through the application programming interface (API), the suspect repeatedly submitted fake buy orders. This raised the price and trading volume. It was a typical price manipulation method designed to mislead ordinary investors into believing that a large buying trend was occurring. The amount of illicit gains obtained by the suspect is estimated to be in the tens of billions of Korean won (provisional figure).

The financial authorities are swiftly investigating unfair trading allegations reported by virtual asset exchanges. This case was concluded about two months after receiving the review results from the exchange. They utilized their own investigative infrastructure, including a large-scale trading data analysis platform.

The financial authorities stated, "We will continue to focus on establishing a sound trading order in the virtual asset market and will use all available means to thoroughly investigate detected unfair trading activities to ensure strict measures and penalties according to the law."

They added, "We will monitor to ensure that the abnormal transaction detection and review systems of virtual asset exchanges operate smoothly under the Virtual Asset Act, and maintain close cooperation with investigative agencies."

Meanwhile, to quickly recognize and systematically respond to illegal activities such as unfair trading in virtual assets, the financial authorities operate a reporting center on the Financial Supervisory Service website.