South Korea’s financial authorities have referred 30 suspected market manipulation cases to prosecutors, the first major enforcement action under the Act on the Protection of Virtual Asset Users, which took effect on July 1, 2024.

What the law actually does

The Act on the Protection of Virtual Asset Users is South Korea’s first comprehensive crypto-specific legislation. It explicitly bans unfair trading practices, including market manipulation, wash trading, and coordinated price pumping schemes.

Beyond the manipulation ban, the law mandates that virtual asset service providers hold substantial portions of customer assets in cold storage. Exchanges must also operate through real-name verified bank accounts, eliminating the anonymized banking workarounds that previously let shadier operations function in a legal gray zone.

The Financial Services Commission has deployed automated detection systems to flag market anomalies in real time.

The enforcement picture is getting sharper

No specific tokens or individuals have been publicly named in connection with the 30 referred cases.

The country is also considering preemptive account freezing for suspected manipulators, without requiring a standard warrant in certain situations. That proposal surfaced in January 2026 and would give authorities the ability to freeze assets before a full investigation concludes.

South Korea has also moved to formally classify digital assets as national wealth under changes to the National Asset Basic Act.

The country ended a nine-year ban on corporate crypto trading, allowing institutional participation with a 5% equity cap.

What this means for traders and investors

Compliance costs will rise for exchanges and virtual asset service providers operating in South Korea. Cold storage requirements, real-name banking, and heightened monitoring obligations all carry operational overhead.

The preemptive freeze proposal, if passed, would give South Korean regulators a tool that most crypto markets globally still lack.