South Korea Targets Crypto Market Manipulation in 2026

South Korea’s Financial Supervisory Service has unveiled an aggressive 2026 work plan targeting market manipulation in the virtual asset sector. The regulator announced planned investigations into high-risk trading schemes disrupting crypto market order.

According to Yonhap, Korea's FSS announced its 2026 plan on Feb 9: investigations into high-risk crypto manipulations (whale, containment/ramp schemes, API orders, SNS misinformation) with AI text/surge detection tools; new Digital Asset Basic Act group for phase-2 legislation…

— Wu Blockchain (@WuBlockchain) February 9, 2026

FSS Chairman Lee Chan-jin presented the comprehensive strategy on February 9 at the agency’s Seoul headquarters. The plan introduces new enforcement tools and AI-powered surveillance systems to combat fraudulent crypto activities.

The crackdown follows recent legislative changes strengthening virtual asset service provider licensing requirements. South Korea continues positioning itself as a global leader in crypto regulation enforcement.

South Korea Targets Whales and Racehorses

The FSS identified specific manipulation tactics for targeted investigation. These include ‘big whale’ schemes deploying massive capital to artificially move markets through coordinated buying and selling.

Regulators will also pursue ‘cage’ manipulation methods. These schemes artificially adjust prices of virtual assets suspended from deposits and withdrawals on specific exchanges.

The ‘racehorse’ technique drew particular scrutiny from authorities. This method involves rapid price inflation through concentrated high-volume purchases at predetermined times.

Market manipulation through application program interface orders faces enhanced monitoring. The FSS flagged social media misinformation campaigns and fraudulent transactions as priority enforcement areas.

To combat these threats, the regulator is developing advanced detection tools. New AI-powered systems will analyze abnormal price surges occurring within seconds and minutes.

The technology will automatically extract suspicious trading patterns and identify coordinated group activity. Text analysis functions using artificial intelligence will scan for manipulation signals.

Digital Asset Framework Takes Shape

The FSS established a preparatory group for implementing the Digital Asset Framework Act. This team will support the virtual asset phase 2 bill’s effective rollout across the industry.

Officials will develop disclosure requirements for virtual asset issuance and transaction support. The preparatory team is creating licensing review manuals for digital asset custodians and stablecoin issuers.

Meanwhile, the regulator announced punitive fines for IT incidents affecting financial services. CEO security responsibilities will increase significantly under the new framework.

Chief information security officers face heightened accountability requirements. Information security disclosures will become mandatory for financial sector participants.

The FSS plans supervisory regulation revisions in consultation with the Financial Services Commission. Priority items eligible for rapid implementation will move forward first.

Financial companies must maintain IT asset inventories and identify system vulnerabilities. Firms failing to remediate critical security gaps face on-site inspections and regulatory action.

The FSS will establish a special judicial police consultative body targeting illegal private financing. This unit will enhance field-level responses to financial crimes affecting ordinary citizens.

Telecommunications and financial companies will share crime-related information with authorities. An AI-powered early warning system for voice phishing attacks will launch under the new framework.

The Illegal Financial Damage Reporting Center will expand its counseling functions. Voice phishing victims will benefit from streamlined coordination between FSS investigators and police.

Following initial FSS investigations, cases will transfer immediately to law enforcement through organic cooperation protocols. A liability compensation system for voice phishing damages is under preparation.

The comprehensive plan also addresses electronic payment and settlement agency protections. Dedicated deposit products for prepaid funds will safeguard users’ money held by payment gateway companies.

External management audits of PG company settlement funds will verify compliance. These measures follow January legislation tightening crypto licensing requirements for virtual asset service providers.