On Upbit, a domestic virtual asset exchange, ThunderCore (TT) surged more than 200% in a day and then plunged more than 70% ahead of the end of transaction support, showing volatility. The financial authorities said they would eradicate unfair trading such as cage pumping, but price manipulation in the virtual asset market continues.
According to the virtual asset industry on the 2nd, at 9 a.m. on the 1st, ThunderCore, for which transactions ended on Upbit, soared more than 211% around 6 p.m. the previous day just before delisting, then plunged more than 70% within a day.
When transaction support is slated to end, the virtual asset faces deposit and withdrawal bans with other exchanges, reducing liquidity, so even small funds can move the order book sharply. The industry calls this cage pumping.
Conditions for cage pumping require deposits and withdrawals of a specific virtual asset within an exchange to be suspended, along with capital and speculative forces to intentionally drive up the price. Unlike normal virtual asset transactions, prices are manipulated through wash transactions using multiple accounts and bot (software programs that automatically perform repetitive tasks without human intervention) trading.
The Financial Supervisory Service said it is operating a market surveillance system using artificial intelligence (AI) to respond to unfair trading in virtual assets. Cage pumping is subject to the Virtual Asset User Protection Act, and if unfair trading such as artificial price manipulation is confirmed, criminal penalties of up to life imprisonment and a penalty surcharge amounting to twice the unjust gains are imposed.
An official at the Financial Supervisory Service said, "An investigation into ThunderCore has not yet begun, but we are closely examining market conditions regarding unfair trading such as cage pumping."