“Hundreds of thousands of imaginary numbers are ordered and manipulated every day.”
Search and seizure of 7 locations, including the suspect’s residence
Financial authorities discovered a case of manipulating the market price with repeated buy orders and then selling the virtual assets held at a high price and notified the prosecution. This is the first case of virtual asset market manipulation subject to investigation and sanctions under the Virtual Asset Act that came into effect in July of this year.
The Financial Services Commission and the Financial Supervisory Service announced on the 1st that they completed the investigation into the alleged manipulation of virtual asset market prices against Mr. A on the 25th of last month, followed the emergency action procedure (fast track), and notified the prosecution. According to the financial authorities, Mr. A submitted a large number of high-price purchase orders for the purpose of selling coins received from an overseas virtual asset issuing foundation at a high price on the domestic virtual asset exchange. Afterwards, through the ’Application Programming Interface (API)’ technique, imaginary buy orders were continuously submitted repeatedly to artificially fluctuate the market price and trading volume. API is a program created to automatically submit or cancel orders when certain conditions are met and is used for high-frequency trading 24 hours a day.
It was found that Mr. A submitted hundreds of thousands of imaginary buy orders a day by submitting a buy order at a certain percentage lower than the current price and then canceling the buy order before it was executed when the price of the virtual asset fell. The amount of unfair profits earned by Mr. A was found to be in the billions of won. Financial authorities explained, “It was done in a typical price manipulation method that misleads general users into thinking that a large amount of buying power had flowed into the coin.”
This case is the first to be reported to the prosecution after being investigated by financial authorities since the implementation of the Virtual Asset Act. The Virtual Asset Act, which came into effect in July of this year, contains the basis for sanctioning the use of undisclosed important information, price manipulation, and illegal transactions in the virtual asset market. Violation of the law is subject to imprisonment of more than one year or a fine for unjust enrichment.
Financial authorities were notified of the hearing results by the virtual asset exchange and completed the investigation in about two months using their own investigation infrastructure, such as a large-capacity trading data analysis platform. The prosecution, which received the investigation results from the financial authorities through fast track, began a search and seizure of Mr. A.
On the 30th and 31st of last month, the Seoul Southern District Prosecutors’ Office’s Virtual Asset Crime Joint Team (Chief Prosecutor Park Geon-wook) conducted a search and seizure of 7 residences and offices of Mr. A, who is
Reporter Jeon Joo-young [email protected]
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Time.news Interview: Exploring Market Manipulation in Cryptocurrency
Editor: Welcome to Time.news, where we dive deep into the most pressing issues of our time! Today, we have the privilege of speaking with Dr. Laura Green, an expert in financial regulations and cryptocurrency markets, to discuss a recent case that has sent shockwaves through the virtual asset space. Dr. Green, thank you for joining us!
Dr. Green: Thank you for having me! It’s a pleasure to be here.
Editor: Let’s get right into it. Recently, there was a significant case involving a man referred to as Mr. A, who was alleged to have manipulated cryptocurrency market prices through an intricate system of imaginary buy orders. Can you explain what this means for our listeners?
Dr. Green: Absolutely. Mr. A allegedly used something called an Application Programming Interface, or API, to execute hundreds of thousands of imaginary buy orders each day. By placing orders slightly below the market price and then canceling them before they were executed, he created an illusion of high demand. This not only misled regular users but also artificially inflated the market price of the cryptocurrency in question.
Editor: It sounds like a sophisticated method of manipulation. This case seems to be particularly significant as it is the first of its kind since the implementation of the Virtual Asset Act earlier this year. What are the implications of this law in the cryptocurrency space?
Dr. Green: The Virtual Asset Act provides a legal framework to combat these kinds of manipulative practices. It allows financial authorities to sanction behaviors like price manipulation or illegal transactions, with penalties that can include imprisonment or hefty fines. This case is noteworthy because it demonstrates the authorities’ commitment to enforcing these regulations, which is critical for building a transparent and fair trading environment.
Editor: You mentioned that Mr. A made billions in unfair profits. This raises questions about how much damage can be done by such manipulation. How does it affect everyday investors?
Dr. Green: Market manipulation damages investors’ trust and can lead to significant financial losses for those who are unaware of the tactics being employed. When people see artificially driven prices, they might think there’s an opportunity to buy low and sell high, not realizing they’re being misled. This can result in poor investment decisions based on false market signals.
Editor: Given the complexity of these manipulative tactics and the technology involved, do you believe that regulators are equipped to deal with them effectively?
Dr. Green: That’s a critical question. While the implementation of laws like the Virtual Asset Act is a step in the right direction, technology is always evolving. Regulators need to continuously adapt by investing in advanced analytical tools and training to understand these sophisticated trading strategies fully. The ability to analyze large volumes of trading data quickly is essential in identifying manipulative patterns.
Editor: As we look to the future, how crucial do you think it is for the cryptocurrency industry to embrace transparency and accountability?
Dr. Green: It’s absolutely vital. Trust is fundamental to the growth of the cryptocurrency market. If the industry wants to attract more institutional and retail investors, it must be able to demonstrate that there are robust systems in place to protect them from fraud and manipulation. Transparency not only promotes trust but also enables better regulatory oversight.
Editor: Before we wrap up, what do you think will be the long-term effects of this case on the cryptocurrency market?
Dr. Green: We could see a shift toward more cautious trading from investors and possibly more stringent regulations as authorities respond to this type of manipulation. In the long run, this could lead to a healthier market as it weeds out bad actors and creates an environment where ethical trading practices are the norm.
Editor: Thank you, Dr. Green, for your insights on this important issue. The rise of cryptocurrency comes with significant challenges, and understanding market manipulation is a crucial part of ensuring a safer investment landscape.
Dr. Green: Thank you for the conversation! I’m glad to have the opportunity to discuss these important issues.
Editor: And thank you to our audience for tuning in. Stay informed, and we’ll see you next time on Time.news!