[Bitcoin Now] Financial Services Commission Imposes First Fines for Unfair Virtual Asset Trading Cases

Financial authorities have taken action against investors engaged in unfair trading practices in the virtual asset market, such as large-scale price manipulation and dissemination of false information, by filing criminal complaints and imposing fines. Notably, this is the first time fines have been imposed since the implementation of the Virtual Asset User Protection Act.

The Financial Services Commission announced on the 3rd, during its 12th regular meeting, that it had approved these measures. The cases include: ▲ a price manipulation incident where large sums of money were mobilized to drive up the prices of multiple tokens, resulting in substantial illicit gains; ▲ an unfair trading case where false information about virtual assets was spread via social networking services (SNS) to gain profit; and ▲ a case of unfair trading that exploited price linkage between markets within a coin exchange.

Yonhap News Agency

First, the price manipulation case that led to a criminal complaint involved a so-called "large whale investor" who purchased large quantities of a specific coin, amounting to tens of billions of won, to create the appearance of active trading and manipulate the price. Once the price rose, the investor sold off all holdings, pocketing billions of won in profit. It was confirmed that, in order to maximize illicit gains following a sharp price increase, the investor even transferred holdings purchased from overseas virtual asset exchanges to domestic exchanges for sale.

The unfair trading case using SNS was also referred for prosecution. This marks the first time financial authorities have investigated and taken action against unfair virtual asset trading conducted through SNS. The suspect purchased virtual assets in advance and then spread false, favorable information on SNS to attract buyers. Once the price increased, the suspect sold all holdings, earning hundreds of millions of won in illicit profit.

The final case involved a sophisticated unfair trading scheme that exploited the fact that exchanges display virtual asset prices converted to Korean won to facilitate trading in both the Bitcoin market and the Tether market. The suspect manipulated the price of Bitcoin through wash trading in the Tether market, creating the false impression that the won-converted prices of other coins traded in the Bitcoin market had surged. As a result, victims who mistakenly believed the prices of those coins had risen in the Bitcoin market sold their coins at low prices, suffering losses amounting to tens of millions of won.

In connection with these cases, the Financial Services Commission imposed fines for the first time since the implementation of the Virtual Asset User Protection Act in order to recover illicit gains from unfair trading activities. In particular, the commission decided to impose fines exceeding the amount of illicit gains, taking into account the motive and circumstances of the violation, the impact on the market (amount of illicit gains), and whether the violator had a prior record. The Financial Supervisory Service also used this opportunity to require coin market exchanges to display not only their own won-converted prices but also the average prices from domestic won-based exchanges for reference.

A Financial Services Commission official stated, "Please refrain from chasing after virtual assets whose prices or trading volumes surge without reasonable cause," and added, "We will continue to strictly investigate and take action against unfair trading practices to protect users and establish a sound trading order not only in the capital market but also in the virtual asset market."