South Korea Cracks Down on Crypto Whales as BOK Pushes Tokenized Bonds

• South Korea referred suspected crypto market manipulation cases to prosecutors.
• Bank of Korea plans tokenized government bonds after Project Hangang success.
• Project Hangang advances digital finance with unified ledger infrastructure.

South Korea is tightening oversight of its digital asset sector while expanding blockchain-based financial infrastructure. Authorities have referred suspected crypto market manipulators to prosecutors as the Bank of Korea advances plans for tokenized government bonds following the success of Project Hangang.

South Korea Intensifies Action Against Crypto Market Manipulation

The Financial Services Commission (FSC) approved the referrals during its 12th regular meeting held on July 1. The regulator said both cases involve suspected violations linked to unfair virtual asset trading practices.

The decision reflects broader efforts to strengthen investor protection and improve confidence across domestic digital asset markets.

One case involves a crypto whale accused of executing a large-scale pump-and-dump strategy across domestic and overseas exchanges. According to the FSC, the investor accumulated nearly half of the token’s circulating supply before creating artificial buying pressure through coordinated trading activity.

Regulators said the suspect accepted losses on overseas exchanges while generating larger profits through sales on South Korean trading platforms. Consequently, authorities believe many retail investors purchased the token after manipulated price increases reached domestic markets.

The second referral concerns alleged market manipulation using automated application programming interface trading alongside manual limit orders. Officials said the strategy created false signals of market demand before previously acquired tokens were sold for profit.

The FSC warned investors to remain cautious when tokens experience unexplained price increases or unusually high trading volumes. Furthermore, regulators announced plans to strengthen market surveillance systems and improve the detection of suspicious trading patterns.

Bank of Korea Expands Digital Finance Through Tokenization

While regulators increase enforcement, the Bank of Korea continues developing blockchain-based financial infrastructure through Project Hangang. 

Governor Shin Hyun-song presented the project’s progress during the European Central Bank’s Sintra Forum in Portugal.

Project Hangang began in October 2023 to test infrastructure supporting future digital currency systems using a unified ledger. During the first phase, the central bank partnered with private banks to issue wholesale central bank digital currency alongside tokenized commercial bank deposits.

According to Shin, the pilot demonstrated that the unified ledger operated reliably under real-world conditions. The platform enabled payments and asset settlements to occur simultaneously, allowing ownership transfers immediately after payment completion.

The governor also said programmable transaction features strengthened compliance while reducing opportunities for misuse. Additionally, deposit tokens proved capable of supporting practical payment functions within the pilot environment.

Tokenized Government Bonds Become the Next Strategic Goal

Building on Project Hangang’s progress, the Bank of Korea is now evaluating tokenized government bonds as its next major initiative. Shin said broader asset tokenization could strengthen monetary policy while supporting financial stability and improving operational efficiency.

He explained that issuing government bonds on the unified ledger could simplify settlement, collateral verification, transaction processing, and asset management. The approach could also reduce operational errors while modernizing South Korea’s financial market infrastructure.

The second phase of Project Hangang will begin during the second half of 2026, expanding digital currency applications into government spending programs. Initial pilot projects will include electric vehicle charging subsidies and selected public-sector operating expenses.

Shin also emphasized connecting South Korea’s digital currency infrastructure with Project Agora, an international initiative supporting tokenized cross-border payments. Integrating foreign exchange and securities settlements into single programmable transactions could reduce costs while strengthening the international role of the Korean won.

Overall, the enforcement measures and tokenization strategy highlight South Korea’s dual approach toward digital assets. Authorities are pursuing stronger market integrity while encouraging responsible financial innovation through regulated blockchain infrastructure.

The post South Korea Cracks Down on Crypto Whales as BOK Pushes Tokenized Bonds appeared first on Live Bitcoin News.