South Korea Refers Crypto Whale to Prosecutors for Pump-and-Dump

South Korea's Financial Services Commission approved a referral to prosecutors at its 12th regular meeting on Wednesday. The commission alleges an individual used large purchases over roughly two months to acquire nearly half of a token's circulating supply listed on domestic and overseas exchanges.

The FSC alleges the suspect spent tens of billions of won to build a dominant position. Ten billion won is about $6.4 million at current rates. The commission says the individual pumped the token's price on overseas trading venues, drew domestic buyers into the market and sold holdings once prices rose, resulting in heavy losses for retail investors.

In a separate case approved the same day, the FSC alleges a different individual used application programming interface channels to place repeated small market buy and sell orders that created the appearance of active trading, while submitting high-priced limit buy orders through the web channel to lift the quoted price. After other traders entered, the suspect divided and sold holdings in portions to realise profits.

The FSC will strengthen its warning system for cases of highly concentrated crypto trading and advance its investigative framework to detect unfair practices more quickly. The referrals shift the matters from administrative enforcement toward potential criminal prosecution by the public prosecutor's office.

In a translated statement, the FSC warned: “Investors should refrain from chasing virtual assets whose prices and trading volumes surge (or spike sharply) without any reasonable cause. In particular, the so-called ‘pump-and-dump' schemes … artificially reduce available supply to inflate prices, and the subsequent sell-off often leads to a sharp price collapse.”

Regulators treat coordinated or deceptive buying followed by rapid selling as market manipulation when those actions or information mislead investors. The cases involve tokens traded both domestically and on overseas platforms, which the FSC noted can complicate detection and enforcement.