South Korea Refers Crypto Whale Pump-and-Dump Cases to Prosecutors

TLDR

South Korea’s Financial Services Commission has referred suspects in two crypto market manipulation cases to prosecutors after reviewing alleged pump-and-dump activity and other unfair trading tactics.

The FSC said it approved the referrals during its 12th regular meeting on July 1. The cases involve alleged price manipulation in virtual asset markets, including one case where a large holder reportedly bought nearly half of a token’s circulating supply.

The regulator said the suspected conduct distorted prices and drew retail investors into risky trades. The FSC also warned investors not to chase tokens that rise sharply without a clear reason.

FSC Refers Two Crypto Manipulation Cases

The first case centers on a crypto whale accused of using tens of billions of Korean won over about two months to influence a token listed on domestic and overseas exchanges. Based on current rates, 10 billion won equals about $6.4 million.

The FSC said the suspect allegedly accumulated nearly half of the token’s global circulating supply. That position gave the suspect strong control over available market supply, according to the regulator.

Authorities said the suspect pushed up the token price on overseas exchanges and then attracted buying from domestic investors. The FSC said the suspect later sold holdings on South Korean exchanges, causing losses for retail traders.

The regulator said the suspect lost money overseas but made larger gains on domestic platforms. The case has now moved to prosecutors, who will decide the next legal steps.

Crypto Whale Accused of Pump-and-Dump Scheme

The FSC described the first case as a pump-and-dump pattern. In such schemes, traders may create artificial buying pressure before selling large holdings into the market.

The regulator said this can lead to a sharp price fall once the large holder exits. It also said small or thinly traded tokens are more exposed to price swings when a few accounts hold or trade large amounts.

The FSC issued a warning to retail traders. “Investors should refrain from chasing virtual assets whose prices and trading volumes surge without any reasonable cause,” the regulator said in a translated statement.

The statement reflects South Korea’s growing focus on crypto market conduct. Regulators have increased reviews of trading patterns since the Virtual Asset User Protection Act gave authorities stronger tools to act against unfair practices.

API Trading Case Also Sent to Prosecutors

The second case involves a suspect accused of using automated and manual trading channels to create the appearance of active market demand. The FSC said the person used API channels to place repeated small market buy and sell orders within seconds.

At the same time, the suspect allegedly placed high-priced limit buy orders through a web channel. Regulators said this helped lift the token price and draw in other buyers.

After other traders entered the market, the suspect allegedly sold holdings in portions to realize gains. The FSC said such tactics can mislead investors about real demand and price strength.

The case drew attention because it involved short-term order activity and rapid trading patterns. Regulators said they plan to improve detection tools for this type of conduct.

South Korea Tightens Crypto Enforcement

South Korea has expanded enforcement in virtual asset markets over the past year. Prosecutors arrested two people in January 2025 over alleged price manipulation on Bithumb, in a case tied to the Virtual Asset User Protection Act.

The country also created a dedicated crypto crime investigation unit as it moved to enforce its first broad investor protection framework for digital assets. The framework targets market manipulation, fraud, and other unfair trading activity.

South Korea has also reviewed tighter rules for financial influencers who discuss stocks and crypto. Proposed rules would require clearer disclosures on holdings and compensation when influencers promote investment products.

The FSC said it will improve warning systems for concentrated trading by small groups of accounts. It also plans to upgrade investigation tools so regulators can detect unfair trading faster and reduce risks for users.

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