In a major development in South Korea’s cryptocurrency market, the Seoul Southern District Prosecutors’ Office has uncovered a sophisticated price manipulation scheme involving the Fusionist (ACE) token, which has seen a 13% decrease in the past day. According to a local source, Lee and Kang orchestrated artificial price inflation on the Bithumb exchange, gaining illicit profits of 7.1 billion won ($4.8 million). This case has been prioritized under the new Virtual Asset User Protection Act and was fast-tracked for prosecution in October 2024.
The investigation highlighted the duo’s use of complex strategies to deceive investors and inflate trading volumes, thereby distorting market realities. At the third trial hearing on April 3rd, prosecutors explained the two main tactics employed: “hit” order strategy and fake buy orders. These manipulative methods misled investors and artificially boosted ACE’s market performance, leading to increased trading activity based on false signals.
One primary tactic used by Lee and Kang was the ‘hit’ order technique, which involved placing limit buy orders above the market rate while simultaneously placing limit sell orders below it. This approach inflated trading volumes by ensuring unconditional trade execution. Prosecutors compared this to “bicycle trading,” creating a fake impression of high market activity to attract unsuspecting investors. By avoiding direct self-trading, the perpetrators bypassed legal consequences, manipulating market sentiment and increasing trading activity. On July 22, 2024, ACE’s trading volume on Bithumb rose nearly 15 times in one day, from an average of 160,000 to around 24.05 million. Currently, the Fusionist token is down 94.2% over the past year and 33.8% in the last month.
Alarmingly, 88.69% of these transactions were manipulated. The accused also used fake buy orders, placing multiple low-price purchase orders at intervals 3%, 5%, 7%, 9%, and 11% below the latest transaction price. These orders were promptly canceled, giving a false sense of strong buy-side interest. By repeating this cycle, they created a deceptive impression of demand, enticing real investors to enter the market. The prosecution found that between July 28, 2024, and August 5, 2024, fake buy orders increased, with nearly 100% cancellation rates. Remarkably, 80-90% of all purchase orders on Bithumb during this period were linked to these deceptive tactics.
This case marks the first enforcement of the Virtual Asset User Protection Act through “Fast Track” prosecution. It coincides with broader regulatory changes in South Korea’s crypto sector. Recently, the country’s Financial Services Commission (FSC) hinted at a potential policy change allowing foreign investors access to domestic exchanges under strict anti-money laundering (AML) requirements. This proposed shift aims to address global competitive pressures and prevent market anomalies like the current case. As the prosecution presents a strong case against Lee and Kang, the trial’s outcome could set a precedent for future cryptocurrency fraud cases in South Korea.
🌎 South Korea’s top financial regulator is signaling a policy shift that could allow foreign investors to access the domestic crypto market. #SouthKorea #Crypto
