South Korea identifies 25 crypto suspects after manipulation cases uncovered $1M gains

South Korea's financial authorities have identified 25 suspects in the two years since the Virtual Asset Investor Protection Act took effect, uncovering illicit gains averaging about $1 million per case. The findings, released July 19, cover more than 40 completed investigations into unfair trading, with over 30 cases referred or reported to investigative agencies.

The law, which came into force on July 19, 2024, mirrors South Korea's capital-markets statute. It prohibits the use of material nonpublic information, price manipulation, other fraudulent trading practices, and trading in self-issued virtual assets. Most of the cases handed over to prosecutors involved price manipulation, with authorities citing "racehorse" and "penning" tactics as representative schemes.

A racehorse scheme places concentrated orders when price-change statistics reset, aiming to draw in buyers. Penning refers to artificially driving up prices on exchanges where deposits and withdrawals are temporarily blocked.

Authorities used an emergency fast-track procedure with investigative agencies. The first case came in October 2024: after receiving an exchange's review, authorities investigated within two months and referred to prosecutors a case involving price manipulation through spoofed API orders. The suspect, identified only as A, placed hundreds of thousands of orders per day.

In September 2025, the Financial Services Commission referred suspect B to prosecutors on allegations the trader used tens of billions of won to drive up prices, then sold holdings for illicit gains worth billions of won. B had secured roughly half the global circulating supply of a specific virtual asset – a classic whale-investor manipulation.

Another case involved fraudulent trading via the spread of false information. In September 2025, authorities referred people tied to a meme-coin issuer. Investigators found they bought the virtual asset in advance, spread false information on social media to attract buyers, then sold their holdings for illicit gains worth hundreds of millions of won.

The 25 suspects identified so far generated average illicit gains of 1.4 billion won (about $1 million). Enforcement activity is likely to intensify as authorities continue using the fast-track procedure and data-sharing with exchanges. Market participants should watch for further referrals and potential precedent-setting rulings that could reshape trading behavior on South Korean crypto platforms.