TLDR
- South Korea is using artificial intelligence to detect suspicious crypto trading more efficiently.
- The Financial Supervisory Service is reviewing unusual price activity involving ZKsync on Upbit.
- Regulators have upgraded their systems to track potential manipulation across different time frames.
- The Financial Services Commission is considering ways to freeze funds during active investigations.
- A crypto executive has received a three-year prison sentence for market manipulation under new laws.
South Korea’s crypto oversight bodies have moved faster to investigate trading activity, strengthen surveillance systems, and apply investor protection laws. Regulators are now deploying artificial intelligence tools, escalating reviews of irregular price actions, and enforcing pre-emptive measures. A recent case involving ZKsync trading on Upbit reflects a broader push to detect and act on manipulation faster.
ZKsync Price Swings Under Review
The Financial Supervisory Service (FSS) began reviewing abnormal price activity involving ZKsync listed on the local crypto exchange Upbit. Officials said they noticed extreme price swings during a system maintenance window that drew regulatory concern. The FSS confirmed it was reviewing the data and may escalate to a formal investigation if necessary.
“Depending on the results, we will determine whether an official probe is needed,” said an FSS spokesperson. The FSS emphasized it is now prioritizing real-time responses over delayed investigations. Experts said this case highlights a shift toward infrastructure-level accountability rather than focusing on isolated incidents.
Legal experts noted the regulator’s focus is shifting from single cases to reinforcing preventive systems for market stability. The FSS review comes as volatility returns to crypto assets traded domestically. The agency is also using advanced detection tools to better understand patterns around unusual movements like those in ZKsync.
South Korea Expands AI Crypto Surveillance
On Monday, the FSS confirmed an upgrade to its internal monitoring system for tracking suspicious trades using artificial intelligence. The AI-powered system now scans token price movements across various time frames to flag potential manipulation. This reduces manual review time and helps detect activity windows more quickly.
The regulator said planned improvements will include detecting coordinated trading behavior and tracing fund origins in suspicious transactions. These features aim to help investigators respond to manipulation before it spreads. FSS officials said such tools allow a more proactive surveillance approach than before.
South Korea’s expanded monitoring reflects recent legislative changes targeting investor protection. The Financial Services Commission (FSC) also proposed mechanisms to freeze suspect funds linked to ongoing cases. Officials said this could help stop money laundering during live investigations.
The FSC is reviewing how to pre-emptively block digital assets if manipulation is detected during trading. This would allow enforcement before suspect actors move funds away. Regulators said these tools will become key to protecting market integrity.
Prison Sentence Highlights Enforcement Shift in South Korea
The Seoul Southern District Court delivered a three-year prison sentence to a crypto executive found guilty of market manipulation. The convicted individual, identified only as Lee, placed deceptive orders and manipulated prices of a token on Bithumb. The sentence was handed down under the Virtual Asset User Protection Act.
The court said Lee repeatedly bought at high prices and sold low, misleading other investors. Prosecutors argued this tactic distorted the market’s true demand signals. The judge ruled that such manipulation harmed fair market function and warranted criminal punishment.
The ruling marks the first known jail term issued under South Korea’s crypto investor protection laws. Authorities say courts are now taking tougher stances on digital asset crimes. The case underlines the enforcement shift to match regulatory upgrades in surveillance.
