South Korea Turns to AI to Detect Crypto Manipulation in 2026

• South Korea deploys AI to detect crypto manipulation in real-time, analyzing trades by the second.
• FSS targets whale schemes, pump-and-dumps, and social media fraud with automated detection tools.
• New Digital Asset Basic Act brings licensing rules for exchanges, operators, and stablecoin issuers.

South Korea plans to deploy artificial intelligence to monitor crypto manipulation across digital asset markets in 2026. 

The Financial Supervisory Service outlined the strategy in its annual work plan released on February 9. Yonhap reported that the agency will focus on schemes that disrupt market order and mislead investors. 

Wu Blockchain shared details of the plan on X, citing statements from the regulator. The initiative also supports the second phase of the country’s virtual asset legislation.

AI Tools Target Crypto Manipulation Schemes

The FSS said it will investigate high-risk crypto manipulation practices using advanced detection systems. These include “whale” trading methods that move prices with large capital flows. 

Another target is the “fence” method that distorts prices when deposits and withdrawals stop on exchanges. Authorities will also monitor the “racehorse” tactic that triggers sharp price spikes within minutes.

The agency plans to track suspicious activity through second-by-second price surge analysis. It will also introduce AI-based text analysis to detect misleading information online. 

According to Yonhap, the system will flag abnormal trading groups automatically. The focus includes API-based trading orders and coordinated misinformation on social networks.

Regulators aim to strengthen early detection of fraudulent behavior. They want faster identification of patterns that signal organized market abuse.

Regulators Expand Laws to Curb Crypto Manipulation

The FSS recently formed a task force to prepare the Digital Asset Basic Act.

This move supports the second stage of South Korea’s virtual asset regulations. The group will design disclosure standards for token issuance and trading support.

It will also prepare licensing and review manuals for digital asset operators. Stablecoin issuers will face clearer approval procedures under the new framework. The report noted that the law seeks stronger transparency across the industry.

The regulator wants users to make informed choices based on reliable data. Officials also plan to promote healthy competition among market participants.

Exchange Oversight Strengthens Through Fee and Data Controls

The FSS plans to refine how exchanges manage and disclose transaction fees. 

Differentiated fee structures will aim to prevent unfair trading advantages. Disclosure rules will improve visibility into exchange operations.

The agency also intends to strengthen enforcement against financial crimes. This effort follows government priorities to eliminate harmful financial practices. A special judicial police consultative body will handle financial crimes affecting the public.

Voice phishing prevention will use an AI-based early warning system. Telecom and financial firms will share crime-related data in real time. Victim counseling services will expand under a reorganized reporting center.

AI Systems Extend to Financial Crime and Cybersecurity

The plan also addresses IT risks across the financial sector. Punitive fines will apply to institutions that cause major system failures. CEOs and Chief Information Security Officers will carry higher security responsibility.

Financial firms must disclose information security practices. Companies that ignore critical vulnerabilities will face inspections and audits. The Integrated Risk Management System will collect cyber threat data nationwide.

The FSS will also publish Financial AI Ethics Guidelines. An AI Risk Management Framework will guide firms throughout AI deployment. These measures aim to ensure fair and accountable use of technology in finance.

Yonhap reported that the strategy seeks to protect investors and strengthen market order. 

Besides, the plan reflects growing concern over crypto manipulation in digital assets. South Korea’s regulators will roll out these measures gradually through 2026.

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