South Korea’s Financial Supervisory Service (FSS) has announced a 2026 work plan that highlights crypto market abuse. The watchdog will conduct investigations into suspicious trades rather than waiting for lengthy complaints or scandals.
The FSS says it will focus on risky patterns like coordinated price moves, sudden whale trades, and bulk buying used to pump token prices. It will also examine sharp price swings that occur when exchanges pause deposits or withdrawals, which can trap regular investors.
FSS Utilizes AI Tools to Catch Manipulation
The FSS is implementing new AI algorithms to monitor cryptocurrency trading in real time and support this more aggressive approach. These programs identify anomalous price spikes, activity associated with linked wallets, and transient manipulations that people might overlook when scanning blockchain and exchange data.
The regulator has upgraded its VISTA monitoring platform. Additionally, it has set aside new funds in 2026 to enhance AI-driven tracking of connected accounts and suspicious fund flows. Officials say the same technology will feed early warning systems for fraud and voice phishing by linking telecom and financial data.
Stronger Legal Powers and Penalties
The Virtual Asset User Protection Act of 2024 marked the start of a broader legal crackdown, which is being complemented by this technology drive. The law requires exchanges to monitor and report unusual activity and prohibits unfair trading practices, such as price manipulation and insider exploitation of confidential information.
A second set of regulations granting regulators extensive authority to freeze accounts suspected of cryptocurrency manipulation is also being prepared. While courts consider the cases, the Financial Services Commission may suspend payments from flagged accounts used for fraudulent volume, false order books, or cross-platform schemes under the new structure.
Courts are already backing this stance with real sentences. In early February 2026, a Seoul court sentenced a crypto executive to about three years in prison for market manipulation on local exchange Bithumb. The case shows that artificial trading and pump tactics now carry serious jail time in South Korea.
At the same time, regulators are developing rules for token disclosures, exchange and stablecoin issuer licenses, and transaction transparency. With AI surveillance, legal account freezes, and more open rules, South Korea is becoming one of the strictest crypto enforcement regimes in Asia.
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