A "whale" investor who manipulated prices by linking domestic and overseas exchanges was reported to prosecutors.
The Financial Services Commission decided on July 1 at its 12th regular meeting to refer suspects to investigative authorities in connection with two cases of crypto market price manipulation. A was accused of manipulating the prices of crypto assets dual-listed on domestic and overseas exchanges for about two months by injecting funds worth tens of billions of won.
After accumulating up to about half of the global circulating supply with large-scale funds to secure a market-dominant position, the person artificially created market conditions favoring buyers and influenced prices. In particular, the person was found to have first pushed up prices on overseas exchanges by using price linkage structures between multiple exchanges, which then led to price increases in the same crypto asset listed on domestic exchanges and induced domestic investors to buy.
A incurred losses on overseas exchanges but realized profits exceeding those losses on domestic exchanges, and the damage was concentrated among domestic investors.
B is suspected of ultra-short-term price manipulation that combined API (application programming interface) market orders with limit high-price buy orders. The case was uncovered through a planned probe by the Financial Supervisory Service. After pre-buying so-called "kimchi coins," B repeatedly placed market buy and market sell orders through the API channel, and on the web (WEB) channel repeatedly placed high-priced buy orders at 10 or more ticks above the best ask to push up prices.
After buyers were lured in, the person was confirmed to have realized gains by selling the holdings in tranches. The Financial Services Commission (FSC) warned, "Refrain from chasing crypto assets whose prices and volumes are surging without reasonable grounds," adding, "Losses can be greater with the 'pump and dump' method, in which a 'whale' investor concentrates accumulation to raise prices and then dumps holdings all at once to realize gains."
Financial authorities plan to improve market alerts, such as those on concentration of transactions in a small number of accounts, to strengthen the provision of information on accumulation and disposal by "whale" investors. In addition, they will upgrade the unfair-transaction framework to detect and take stern action against unfair transactions in the crypto market, including price manipulation by whale investors.