Nikolas Sargeant
South Korea's Financial Supervisory Service has announced intensified scrutiny of suspected cryptocurrency price manipulation in 2026, outlining planned investigations targeting high-risk trading tactics including whale activity and schemes exploiting exchange disruptions following a series of operational incidents.
FSS Governor Lee Chang-jin stated the agency will focus on high-risk trading practices undermining market order, including coordinated manipulation and schemes exploiting disruptions in exchange infrastructure, according to Yonhap News Agency.
The FSS indicated probes will target tactics involving large-scale whale trading, artificial price swings during exchange deposit or withdrawal suspensions, and coordinated trading mechanisms using APIs or social media to spread false information. The regulatory expansion follows operational failures at major Korean exchanges that exposed vulnerabilities in market oversight.
Under the plan, the regulator intends to strengthen automated detection by analyzing abnormal price movements at very short intervals and developing tools capable of flagging suspected manipulation "sections" and related account groups. The surveillance system will incorporate text analysis to identify coordinated misinformation campaigns across social media platforms.
The FSS stated it will investigate practices distorting price discovery, including schemes exploiting exchange deposit or withdrawal suspensions—a practice referred to in South Korea as "gating." These situations can trap supply on platforms, creating artificial price movements disconnected from broader digital asset markets.
The financial watchdog will track manipulation using market-order APIs and coordinated activity aimed at amplifying false narratives on social media. On February 2, the FSS expanded its use of artificial intelligence-powered surveillance tools to monitor crypto markets, reducing reliance on manual identification of potential manipulation.
In parallel, the watchdog established a task force to prepare for implementation of the Digital Asset Basic Act, the second phase of South Korea's cryptocurrency regulatory framework. The unit will support implementation planning including work on disclosures, exchange oversight, and licensing standards rather than direct enforcement.
The enhanced oversight follows a series of exchange-related incidents highlighting operational risks. On Sunday, cryptocurrency exchange Bithumb announced it recovered 99.7% of excess Bitcoin mistakenly credited to users during a promotional error. While the exchange stated no customer assets were lost, the episode briefly triggered sharp price swings and prompted compensation measures for affected users.
The incident triggered regulatory response. According to Asia Business Daily, the Financial Services Commission held an emergency inspection meeting Sunday with the FSS and Korea Financial Intelligence Unit, where officials reportedly ordered comprehensive review of internal controls across all domestic cryptocurrency exchanges.
On February 3, the FSS announced it was reviewing sharp price movements in the ZKsync token during a system maintenance window on Upbit. The regulator stated it was analyzing data and could escalate the review into a formal investigation depending on findings.
Upbit operator Dunamu previously told Cointelegraph it maintains internal systems flagging suspicious activities and processes for cooperating with regulators. "When regulators request information, we can provide the relevant trading data without delay," the spokesperson stated.
