South Korea’s Financial Supervisory Service (FSS) said it will step up scrutiny of suspected cryptocurrency price manipulation in 2026, outlining a slate of planned investigations that target high-risk trading tactics, including “whale” activity and schemes that exploit disruptions at local exchanges, local outlet Yonhap reported Monday.
According to Yonhap News Agency, FSS Governor Lee Chang-jin said that the agency will target high-risk trading practices that undermine market order, including coordinated manipulation and schemes exploiting disruptions in exchange infrastructure.
The FSS said the probes will focus on tactics that involve large-scale trading by whales, artificial price swings during exchange deposit or withdrawal suspensions and coordinated trading mechanisms using APIs or social media to spread false information.
Under the plan, the regulator said it intends to strengthen automated detection by analyzing abnormal price movements at very short intervals and developing tools that can flag suspected manipulation “sections” and related account groups, alongside text analysis that can help identify coordinated misinformation.
Planned probes target crypto manipulation tactics
The FSS said it will investigate practices that distort price discovery, including schemes that take advantage of exchange deposit or withdrawal suspensions, a practice referred to in South Korea as “gating.”
These situations can trap supply on a platform, creating artificial movements disconnected from the broader digital asset markets.
The financial watchdog also mentioned that it will track manipulation using market-order APIs and coordinated activity aimed at amplifying false narratives on social media.
On Feb. 2, the FSS expanded its use of artificial intelligence-powered surveillance tools to monitor crypto markets, reducing reliance on manual identification of potential manipulation.
In parallel, the watchdog established a task force to prepare for the introduction of the Digital Asset Basic Act, the second phase of the country’s crypto regulatory framework.
The unit will support the implementation planning rather than enforcement, including work on disclosures, exchange oversight and licensing standards.
Related: South Korea tightens crypto licensing rules for exchanges and shareholders
Exchange incidents add urgency to oversight push
The tougher tone arrives after a series of exchange-related incidents put operational risk back in the spotlight.
On Sunday, crypto exchange Bithumb said it recovered 99.7% of excess Bitcoin (BTC) mistakenly credited to users during a promotional error.
While the exchange said no customer assets were lost, the episode briefly triggered sharp price swings and prompted compensation measures for affected users.
The incident triggered a response from regulators. According to the Asia Business Daily, the Financial Services Commission (FSC) held an emergency inspection meeting on Sunday with the FSS and the Korea Financial Intelligence Unit (KoFIU), where officials reportedly ordered a comprehensive review of internal controls across all domestic crypto exchanges.
On Feb. 3, the FSS said it was reviewing sharp price movements in the ZKsync token during a system maintenance window on Upbit. The regulator said it was analyzing the data and could escalate the review into a formal investigation depending on the findings.
Upbit operator Dunamu previously told Cointelegraph that it has internal systems that also flag suspicious activities and a process that involves cooperating with regulators.
“When regulators request information, we can provide the relevant trading data without delay,” the spokesperson told Cointelegraph.
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