South Korea Deploys AI To Hunt Unfair Crypto Trades: Violators Risk Life Prison

South Korea is moving deeper into algorithmic enforcement of its cryptocurrency markets as financial authorities roll out artificial intelligence tools to detect and act on unfair trading.

A report by a local outlet stated that the Financial Supervisory Service has begun upgrading its virtual asset trading analysis platform, known as VISTA, to incorporate advanced AI capabilities aimed at identifying market manipulation more quickly and comprehensively.

VISTA, which is already used as a core investigative tool, analyzes large volumes of trading data, automatically calculates abnormal indicators, and visualizes trading patterns to support enforcement actions.

AI-Powered System To Target Wash Trading and Spoofing in Crypto Markets

The regulator disclosed that it expanded its computing capacity in December by adding servers equipped with high-performance CPUs and GPUs, allowing AI algorithms to run on shared and distributed data systems.

On top of that infrastructure, the FSS developed its own detection algorithm to automate a process that previously relied on manual review by investigators.

The system breaks a suspect’s trading activity into countless time segments, ranging from seconds to months, and calculates abnormal indicators across every possible interval.

That approach is designed to surface manipulation regardless of how brief, prolonged, or fragmented the conduct may be.

Officials said the AI functions will be expanded gradually through the end of the year, supported by a 170 million won budget allocated for further server upgrades.

The stated goal is earlier detection of unfair virtual asset trading and faster case handling, particularly in markets where profits can be moved or concealed in minutes.

The AI surveillance forms part of a broader real-time monitoring framework used by the FSS in cooperation with domestic crypto exchanges.

The system scans markets around the clock for signs of wash trading, spoofing, coordinated order placement, and sudden price or volume distortions across multiple timeframes.

Suspicious accounts can be flagged centrally and referred for investigation, and following recent legal changes, authorities are preparing to take action even before profits are realized.

Life Sentences and Heavy Fines Shape South Korea’s Crypto Rules

The regulatory environment in South Korea is based on the already established laws on capital markets, which already categorize market manipulation, insider trading, and fraudulent transactions as criminal offenses.

In the Financial Investment Services and Capital Markets Act, the offenders may be imprisoned and required to pay huge criminal fines as a result of illegal gains and the comprehensive administrative penalties.

Courts can sentence people to life imprisonment for offenses that are extreme in terms of the amount of money or the frequency of the offenses.

Criminal fines may now be four to six times the profit obtained or injuries avoided, and administrative fines may now be billions of won where the profit is immeasurable.

With the implementation of the Virtual Asset User Protection Act in July 2024, the government has expanded their area of concern on price manipulation and unfair trading of digital assets.

In 2025, South Korea created a unified response team comprising FSS, the Financial Services Commission, and the Korea Exchange to speed up key investigations.

That concern has been upheld by recent instances In September 2025, regulators banned 75 accounts in a 100 billion won scheme of manipulation, the first example of new authorities stopping suspicious activity before profit withdrawal.

Officials have since pointed to that case as a template for crypto enforcement, arguing that digital assets are even easier to move beyond regulatory reach once they leave exchanges.

In January 2026, regulators confirmed they are considering a formal “payment freeze” mechanism for crypto accounts, modeled on tools already used in stock markets.