South Korean authorities have charged individuals in a landmark case of fraudulent cryptocurrency trading described as a “pump and dump.” This marks the first prosecution under the country’s new Virtual Asset User Protection Act, effective as of July 2024. The Financial Services Commission (FSC) of South Korea detailed that the accused manipulated digital asset prices within short periods, approximately 10 minutes, thereby reaping substantial profits amounting to hundreds of millions of Korean won in a single month.
The alleged method involved placing numerous buy orders to artificially boost a cryptocurrency’s price followed by selling off substantial quantities of previously acquired tokens—actions that resulted in sharp price fluctuations, according to the FSC. This crackdown emphasizes South Korea’s increased scrutiny on unfair trading practices as crypto transaction volumes continue to rise.
The FSC has pledged to enhance investigative frameworks, advance monitoring conducted by virtual asset service providers (VASPs), and explore structural market improvements to bolster transparency and ensure a fair trading environment.
In related developments, South Korea is nearing approval for corporate crypto trading accounts following discussions at the second Virtual Asset Committee meeting on January 15. Additionally, the FSC is anticipated to soon deliberate punitive measures concerning Upbit, a major local exchange implicated in extensive Know Your Customer (KYC) compliance violations in 2024.
Meanwhile, the courts have seen progress on longstanding legal proceedings against Lee Jung-hoon, the former chairman of Bithumb, who is believed to be the actual owner of the exchange. On January 16, Lee was acquitted in an appeal related to a significant customer data breach that occurred in 2017, impacting 31,000 users and resulting in nearly $7 million in stolen funds.
