South Korea investigated more than 40 crypto market manipulation cases in two years

South Korea’s financial authorities said they investigated more than 40 cases of unfair trading in the last two years, including market manipulation and fraudulent crypto trading. For virtual asset service providers (VASPs), the important part is that enforcement is no longer just theory: 30 cases were reported or referred to investigative agencies, and 25 suspects were identified after the Virtual Asset User Protection Act took effect in July 2024.

1. According to Financial Services Commission Chair Lee Eog-won in an X post, the average unlawful gains in these cases were around 1.4 billion Korean won ($940,000). That gives a useful sense of scale: this is not just small-account noise, and it explains why regulators are treating crypto market surveillance as an operational issue, not a PR issue.
2. Lee said the “Virtual Asset User Protection Act” was meant to bring the virtual asset market into the legal framework and establish a user protection system for virtual assets. In practice, that means South Korea has moved from a market with looser oversight into one where user protection and trading conduct sit under a clearer statutory regime.
3. The law requires VASPs to separate user deposits and virtual assets from their own corporate holdings, and to hold client deposits in banks. For PSPs, banks, and VASPs working in or with South Korea, that is the kind of rule that changes onboarding, custody, and settlement plumbing, not just compliance paperwork.
4. The legislation also targets insider trading, wash trading, and market manipulation, while expanding the Financial Services Commission’s authority to supervise and inspect VASPs. Lee added that the FSC will continue to enhance market surveillance investigation and monitoring systems based on AI and respond proactively to high-risk areas.