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Korea Refers Approximately 30 Virtual Asset Market Manipulation Cases for Investigation: Key Findings and Legal Risks
The Financial Services Commission and the Financial Supervisory Service have released the results of their first two years of enforcement under Korea’s Virtual Asset User Protection Act. As of July 20, 2026, the authorities had completed investigations into approximately 40 cases and referred or reported around 30 cases to investigative authorities. A total of 25 individuals were identified as suspects, with average alleged unlawful gains of approximately KRW 1.4 billion per case. Enforcement Results Under Korea’s Virtual Asset User Protection Act Korea’s Virtual Asset User Protection Act took effect on July 19, 2024. The Act prohibits unfair trading activities in the virtual asset market, including the misuse of material non-public information, market manipulation, and fraudulent trading practices. Among the approximately 30 cases referred or reported to investigative authorities, most involved suspected market manipulation. The authorities also identified several fraudulent trading cases involving false or misleading information distributed through social media. The key enforcement figures announced by the Korean financial authorities include: ▪️ Approximately 40 investigations completed ▪️ Approximately 30 cases referred or reported to investigative authorities ▪️ 25 individuals identified as suspects ▪️ Average alleged unlawful gains of approximately KRW 1.4 billion per case ▪️ An average of approximately eight virtual assets involved per case A referral or report does not mean that a criminal conviction has been entered. It means that the financial authorities identified suspected violations and transferred the matter to investigative authorities. Some of the announced cases remain under criminal investigation or are currently being tried in court. Market Manipulation Methods Identified by Korean Regulators Manipulating Price-Ranking Systems One method involved concentrating orders at specific times when a trading platform’s price-change rankings were reset. By pushing a virtual asset into the list of top-performing assets, traders could attract additional buying interest and then sell their existing holdings at higher prices. A large purchase made at a particular time does not automatically constitute market manipulation. However, regulators may examine whether the orders were intended to influence rankings, attract other investors, and facilitate the subsequent disposal of previously held assets. Exploiting Temporary Suspension of Deposits and Withdrawals Another method involved taking advantage of situations in which deposits and withdrawals of a particular virtual asset were temporarily suspended on one or more exchanges. When assets cannot be transferred to or from the exchange, the price on that exchange may become temporarily disconnected from prices elsewhere. Traders may attempt to increase the internal exchange price through concentrated purchases and then sell their holdings at the inflated price. A deposit or withdrawal suspension is not itself evidence of misconduct. The legal issue is whether a person deliberately exploited the restricted market environment to create an artificial price and induce trading by other users. High-Frequency and Deceptive Orders Using APIs An application programming interface, or API, allows orders to be submitted automatically through trading software. The authorities identified cases in which API keys and multiple accounts were allegedly used to submit high-frequency buy and sell orders, including orders that were not intended to be genuinely executed. In one case, the authorities found that automated orders and deceptive bids were allegedly used to increase the market price before virtual assets associated with the issuing foundation were sold at higher prices. Using an API or automated trading system is not unlawful by itself. The key question is whether the orders reflected a genuine intention to trade or were designed to create a false impression of market demand and induce other users to buy or sell. False Social Media Statements and Meme Coin Trading The authorities also identified a case in which persons connected to a meme coin allegedly purchased the asset in advance, published false information through social media, and then sold their holdings after additional buyers entered the market. Promoting a virtual asset project, exchange listing, partnership, or business plan is not automatically unlawful. However, publishing nonexistent investment arrangements, partnerships, or development plans as if they were true—and using that information to sell previously acquired assets—may constitute fraudulent trading under Korean law. How Is Legitimate High-Volume Trading Distinguished from Market Manipulation? Purchasing an asset before its price rises and later selling it at a profit does not, by itself, establish market manipulation. Korean financial and investigative authorities generally examine the purpose and overall pattern of the trading activity rather than viewing each order in isolation. Relevant factors may include: ▪️ Whether repeated high-priced purchases or deceptive orders were submitted ▪️ Whether there was a genuine intention to execute the orders ▪️ Whether multiple accounts acted under common instructions ▪️ Whether the accounts were connected to an issuing foundation or major holder ▪️ Whether significant holdings were sold immediately after the price increased ▪️ Whether social media posts were closely connected to the timing of sales ▪️ Whether orders across Korean and overseas exchanges were coordinated Even where accounts or API keys were registered in another person’s name, investigators may examine who actually controlled the trading, who gave the instructions, and who ultimately received the profits. Criminal Penalties and Administrative Surcharges Virtual asset market manipulation and fraudulent trading may result in both criminal penalties and administrative surcharges intended to recover unlawful gains. According to the financial authorities’ announcement, the statutory minimum term of imprisonment increases according to the amount of unlawful gains: ▪️ Less than KRW 500 million: imprisonment for at least one year ▪️ KRW 500 million to less than KRW 5 billion: imprisonment for at least three years ▪️ KRW 5 billion or more: imprisonment for at least five years The actual penalty may vary depending on the conduct involved, the calculation of unlawful gains, the level of participation, and whether additional fines, confiscation, or collection orders are imposed. In the announced enforcement results, administrative surcharges equivalent to approximately 125% to 165% of the unlawful gains were imposed in one fraudulent trading case and one market manipulation case. A market manipulation matter may therefore proceed beyond an exchange account restriction. It may lead to regulatory investigation, referral or reporting to investigative authorities, criminal investigation, prosecution, trial, and a separate administrative surcharge proceeding. AI-Based Monitoring and Future Regulatory Measures Korean financial authorities have introduced AI-based market surveillance and investigation systems capable of conducting real-time monitoring, analyzing orders on a second-by-second basis, and automatically identifying potentially suspicious accounts and trading periods. Korean virtual asset exchanges have also strengthened their continuous monitoring systems. Exchanges may report suspicious trading to financial or investigative authorities and may issue warnings or restrict orders when potentially abusive trading patterns are repeatedly detected. The authorities are also considering whether to include the following measures in the proposed second-stage Digital Asset Act: ▪️ Freezing accounts and financial accounts to prevent the concealment of unlawful gains ▪️ A reporting and reward system for the early detection of unfair virtual asset trading These measures were under consideration at the time of the announcement and should not be treated as fully implemented rules. Responding to a Market Manipulation Investigation in Korea A person who receives an account restriction or a request for an explanation from a Korean virtual asset exchange should first identify the specific orders and trading periods under review. Where automated trading or market-making activities were conducted, relevant evidence may include: ▪️ Order, execution, and API usage records ▪️ Automated trading settings and documented trading strategies ▪️ The relationship between the registered account holder and the actual operator ▪️ Communications with the issuing foundation or major asset holders ▪️ Transfers between personal wallets and virtual asset exchanges ▪️ The basis and circumstances for social media statements ▪️ Records showing how trading profits were received and distributed Automated trading or high-volume trading does not automatically establish market manipulation. However, simply stating that the activity was a legitimate investment may not be sufficient. The trading purpose, genuine intention to execute orders, relationship between accounts, and ultimate recipient of the profits should be explained through objective records. Decent Law Firm advises clients on exchange inquiries, investigations by Korean financial authorities, police and prosecution proceedings, and criminal trials involving alleged virtual asset market manipulation and fraudulent trading. This content is provided for general informational purposes only and does not constitute legal advice for any individual matter.
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Do Crypto & Stock Influencers (KOLs) Have to Disclose Their Holdings? What the New Korean Law Means for You
Crypto and stock influencers in Korea are increasingly hearing the term "mandatory asset disclosure" — and for good reason. The Democratic Party of Korea is preparing legislation that would require financial influencers (KOLs) who recommend stocks or crypto assets to publicly disclose the type and quantity of assets they hold, as well as any compensation they receive. What Does the Proposed Amendment Actually Require? The proposed amendment to the Virtual Asset User Protection Act centers on three key obligations. Anyone who repeatedly recommends crypto, stocks, or other financial investment products to a broad audience — or who receives compensation to encourage trading — must disclose the type and quantity of assets they hold, along with any remuneration received. Remuneration includes not just cash, but tokens, commissions, advertising fees, and other forms of payment. The penalties are what make this significant. This is not a minor administrative fine. Violations could be treated on par with market manipulation and front-running under the Capital Markets Act — in other words, a serious market order violation. Why Does This Matter Now, Before the Law Has Even Passed? Even before the legislation is enacted, the market has already shifted. Influencers who do not disclose their holdings are increasingly viewed with suspicion. In the digital asset space in particular, a common practice has come under scrutiny: receiving token allocations at below-market prices with short lock-up periods, then publishing investment recommendation content to followers. This structure is one of the primary targets of the proposed legislation. Once the law passes, past content could also become an issue. That is why now is the time to review how your channel operates. What KOLs and Trading Room Operators Need to Check Right Now The core question is: what do I need to disclose, and how much? 1. Disclosure of Holdings in Recommended Assets If you recommend a coin or stock, you need a clear standard for disclosing whether you hold it, the size of your position, and when you acquired it. Simply mentioning that you also hold the asset is not enough — the specific wording and timing of your disclosure matters. 2. Compensation Received from Projects or Exchanges If you receive cash, tokens, commissions, or advertising fees from any project or exchange, you need to document what form the payment takes, when it is received, and where and how it is disclosed in your content. Receiving compensation is not itself a problem. Concealing it is. 3. Paid Trading Rooms and Membership Services Even if you describe your service as "sharing information," you need to assess whether it could be characterized as investment advisory activity in substance. This includes checking whether you meet the registration requirements for a quasi-investment advisory business, and whether your terms of service and operating structure are aligned with the direction of the new regulations. If Any of the Following Apply to You, Consult a Lawyer Before Continuing You have received tokens or commissions from a project and recommended that asset to your audience. You operate a paid trading room or membership service where you share trade timing information. You have used language such as "principal guaranteed" or "guaranteed returns" in your content. You have received token allocations with short lock-up periods or favorable pricing, and subsequently published investment recommendation content. If any of these apply, the way you currently operate your channel may be a direct target of the proposed legislation. If You Run a Channel, Set Your Standards Now The question we hear most often from KOLs and influencers is this: "How much do I actually need to disclose? If I share too much, I expose my strategy. If I share too little, it looks like I'm hiding something." The answer is not to disclose everything. It is to establish a clear, consistent disclosure standard that fits your business model — before a problem arises. In actual virtual asset and capital markets cases, individuals who had defined their disclosure and documentation standards in advance and applied them consistently had significantly more room to defend themselves when investigations or complaints arose. Decent Law Firm's Virtual Asset Practice Group can help you identify where your current channel and content structure may carry legal exposure, establish an asset disclosure standard aligned with amendments to the Capital Markets Act and the Virtual Asset User Protection Act, draft disclosure language and disclaimers for conflict-of-interest situations, and review your terms of service and operating structure if you run a paid service. If you are already running a channel, or planning to launch KOL activity in earnest, get your standards in place now — before a complaint, investigation, or lawsuit forces the conversation. Contact Decent Law Firm's Virtual Asset Practice Group today.
