- The fine targeted a crypto whale for unfair trading practices, including creating artificial trading volume, spreading false information, and exploiting price discrepancies
- This action is a direct result of the larger enforcement framework established by the Virtual Asset User Protection Act (VAUPA), which took effect on July 19, 2024
- A Digital Asset Basic Act is being drafted, with the goal of establishing the commercial and institutional framework for cryptocurrency innovation while prioritizing consumer protection
Today, the Financial Services Commission (FSC) of South Korea has imposed its first-ever fine targeting a crypto whale for unfair trading practices, including creating artificial trading volume, spreading false information, and exploiting price discrepancies. This shows that officials are likely getting a lot more serious about enforcing crypto rules.
The action is a direct result of the larger enforcement framework established by the Virtual Asset User Protection Act (VAUPA), which took effect on July 19, 2024. It requires exchanges and regulators to actively monitor for and prevent market manipulation.
Representing the first enforcement milestone under South Korea’s new legal framework, the fine indicates that regulators are now ready to act on manipulative behavior in crypto markets. Compared to how things have been handled in the past, it demonstrates a growing focus on crypto market integrity and investor protection.
Crypto landscape in South Korea
There have been several interesting news stories lately coming from South Korea when it comes to crypto. For instance, a won-backed stablecoin law is expected to roll out, possibly as early as October. This could usher in a new era of regulated digital currency issuance, making sure new technology comes with proper supervision.
A Digital Asset Basic Act is also being drafted, with the goal of establishing the commercial and institutional framework for cryptocurrency innovation while prioritizing consumer protection.
Related: South Korea to Roll Out New Legislation for Won-Pegged Stablecoins in October
Then, earlier this year, the FSC already introduced a phased policy to permit institutional and corporate crypto trading, reversing longstanding restrictions with risk-management requirements in place.
Interestingly, the strict approach to market behavior is also seen in equities. For example, in July, the FSC joined forces with the Korea Exchange to crack down on unfair trading and illegal short-selling, even proposing fines up to 100% of offending trades.
There was also a little bit of controversy a few days ago when Lee Eok-won, nominee to lead the FSC, described crypto as lacking intrinsic value and being highly volatile, which sparked criticism from the crypto industry.
Related: South Korea Halts All Crypto Lending After 13% of Borrowers Liquidated in One Month
Worth noting is that over 16 million people in South Korea (more than 30% of the population) have opened cryptocurrency exchange accounts. It seems that many young people are turning to crypto not because of an ideological belief in blockchain, but rather due to financial pressures and a lack of traditional opportunities for building wealth.
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