South Korea Mulling Account Freezes for Traders Manipulating Crypto Market: Report

Cryptocurrency account freezes are under consideration in South Korea as authorities look for ways to stop traders from moving profits gained through market manipulation.

The government wants to act faster to prevent illegal gains from disappearing before regulators can intervene.

Financial Authorities Consider Earlier Action

According to local media Newsis, South Korea’s Financial Services Commission is studying whether it should have the power to freeze crypto accounts before suspects move their funds in case of theft.

Currently, authorities need a court warrant to freeze accounts, which can delay action and allow traders to hide assets in private wallets.

The FSC is reportedly looking at a system that would block transactions early if manipulation is suspected.

The idea is similar to tools used in the country’s stock market, where authorities can prevent people from cashing out illegal gains.

Officials said tactics such as front-running, wash trading using bots, and placing large buy orders can generate significant profits quickly.

These profits can vanish before the authorities have a chance to act, leaving investors at risk. The FSC argues that earlier intervention would give regulators a better chance to stop such activities.

A discussion on this proposal reportedly took place in a closed-door meeting in November. Officials also reviewed the first case of crypto price manipulation handled under rules that took effect in April 2025.

In a separate effort to reinforce the crypto market, South Korea will tighten rules for digital currency transfers.

All transactions, even those under 1 million won ($680), will require reporting of sender and receiver details. The measure is designed to curb tax evasion and other illicit activities.

Stronger Rules Could Be Coming for Crypto Markets

It is worth noting that the proposal to allow crypto account freezes is part of a wider effort to make crypto trading safer. This is South Korea’s first phase of crypto laws focused on protecting users.

However, the next phase is expected to introduce stablecoin rules and tighter controls on market abuse.

This is needed in response to recent developments in the market. For example, South Korea’s banks are partnering with tech firms to gain an early advantage in the expanding stablecoin market.

Other measures suggest regulators are willing to act broadly. In October, the National Tax Service said crypto stored in cold wallets could be seized in tax investigations.

In December, the FSC also considered requiring exchanges to compensate users for losses from hacks or system failures, even if the platforms were not negligent.

Meanwhile, South Korea’s Financial Intelligence Unit is set to impose heavy penalties on major crypto exchanges for widespread anti-money laundering violations. These steps show that South Korea is moving toward stricter oversight.

Essentially, by giving authorities the power to freeze accounts early, the government aims to protect investors and prevent manipulation as crypto trading continues to grow.

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