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More than 30 virtual asset market manipulation cases — employing novel schemes dubbed "racehorse," "fish farm" and "whale" — have been uncovered and referred to investigative authorities in the two years since the Virtual Asset User Protection Act took effect. The average illicit gain per case reached 1.4 billion won ($940,000), with at least one case exceeding 5 billion won.

The Financial Services Commission and the Financial Supervisory Service said Sunday that financial authorities had wrapped up investigations into more than 40 virtual asset unfair-trading cases. Of those, more than 30 cases in which market manipulation or fraudulent trading was confirmed were referred or reported to investigative agencies.

A total of 25 suspects were identified. On average, eight virtual asset tokens were used per case.

The scale of illicit gains was substantial. The average per-case profit was 1.4 billion won, with eight cases falling in the 500 million won to 5 billion won range and one large-scale case exceeding 5 billion won. Authorities imposed surcharges equivalent to 125 to 165 percent of illicit gains in one market-manipulation case and one fraudulent-trading case, clawing back the illegal profits.

Investigators found a range of novel schemes exploiting the structural characteristics of the virtual asset market. One prominent method, dubbed "fish farm," involves artificially inflating the price of a virtual asset whose deposits and withdrawals have been suspended on a particular exchange, taking advantage of the resulting difficulty in arbitrage trading against prices on outside exchanges.

The "racehorse" scheme — in which perpetrators rapidly accumulate large positions across multiple tokens at a specific moment to drive prices up quickly — was also uncovered. Cases involving the "whale" method, deploying massive funds to influence prices over an extended period, were likewise included in the investigations.

An ultra-short-term market manipulation case fast-tracked to investigative authorities in October 2024 is already under trial. Authorities also uncovered additional cases involving manipulation carried out over medium- to long-term periods and referred those to investigators.

Fraudulent trading that used social media to deceive investors was also caught. A group that issued a meme coin, spread false positive news on social media to inflate its price and then dumped their holdings all at once was referred to investigative authorities in September last year on charges of pocketing hundreds of millions of won in illicit gains and is now standing trial.

Financial authorities said they worked with domestic and overseas exchanges to tackle cross-border virtual asset crimes. They also stepped up monitoring of high-risk areas, including by detecting signs of false information being spread through social media during complaint-handling processes and launching investigations accordingly.

The authorities plan to bring virtual asset market regulation up to the standard applied to capital markets. They are pushing to include in the Digital Asset Basic Act provisions for freezing virtual asset accounts and bank accounts to prevent concealment of illegal profits, as well as a system for reporting violations and paying whistleblower rewards.

"Unfair trading schemes are becoming increasingly sophisticated and organized," a financial authority official said. "We will strengthen our investigative capabilities and domestic and international cooperation frameworks to respond firmly to conduct that undermines market order."


attom@heraldcorp.com