South Korea Turns AI Into a Weapon Against Crypto Manipulation

Buried in the mechanics of South Korea’s latest enforcement push is a shift that changes how crypto markets are policed: detection is no longer episodic or complaint-driven, but continuous, automated, and designed to act before damage spreads.

That transition explains why oversight actions are now moving faster than the price moves they target.

South Korea’s regulators have sharply accelerated cryptocurrency supervision by deploying advanced AI systems and pivoting toward preemptive enforcement, signaling a move away from reactive investigations toward real-time market control. The effort is being led by the Financial Supervisory Service (FSS), with parallel policy reviews underway at the Financial Services Commission (FSC) and the Korea Financial Intelligence Unit (FIU).

Inside VISTA: Automated Market Surveillance at Scale

At the center of the overhaul is an upgraded version of VISTA (Virtual Assets Intelligence System for Trading Analysis), the FSS’s internal monitoring platform. The new system replaces large parts of manual review with AI-driven pattern detection designed to surface manipulation that previously went unnoticed.

VISTA applies a sliding-window grid search algorithm that scans every sub-period of trading data, rather than relying on fixed timeframes. This allows the system to isolate short-lived manipulation windows that human analysts often miss. In practice, the AI continuously tracks behaviors associated with wash trading, spoofing, and coordinated pump-and-dump schemes across thousands of tokens simultaneously.

To support this computational load, the FSS allocated 170 million won in its 2026 budget for high-performance servers equipped with advanced CPUs and GPUs, expanding the infrastructure required for continuous surveillance rather than periodic audits.

From Post-Mortems to Immediate Intervention

The technological upgrade is paired with a procedural shift. Regulators are moving from after-the-fact investigations toward early-stage intervention, aimed at stopping illicit activity before proceeds can be dispersed.

The FSC is currently reviewing mechanisms that would allow temporary payment freezes on suspected crypto accounts, preventing rapid laundering or asset transfers once abnormal trading behavior is detected. At the same time, the FSS has begun applying its enhanced standards in live market reviews.

One recent case involved sharp price movements in ZKsync on the Upbit exchange, where regulators assessed activity using the new AI-driven framework. The review marked a shift toward infrastructure-level accountability, rather than waiting for formal complaints or prolonged data requests.

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In parallel, the FIU plans to tighten transaction traceability. Starting in 2026, South Korea intends to expand the Travel Rule to cover all crypto transactions, eliminating the previous 1 million won threshold that limited reporting requirements.

Legal Enforcement Sets a Clear Backdrop

The technological push coincides with a more aggressive legal posture. South Korea has begun issuing its first major convictions under the Virtual Asset User Protection Act, reinforcing that surveillance upgrades are backed by real penalties.

On February 4, 2026, a Seoul court sentenced a crypto executive identified as “Lee” to three years in prison for market manipulation on Bithumb. Under current law, manipulation cases generating more than 5 billion won in illicit profits can result in life imprisonment and fines of up to six times the illegal gains.

Structural Takeaway

South Korea’s approach is evolving from rule-based oversight into systems-level market supervision, where AI identifies risk as it forms and enforcement tools are designed to act immediately. Rather than relying on deterrence alone, regulators are building a framework where manipulation becomes harder to execute, easier to detect, and faster to contain.

For now, the direction is clear: crypto markets in South Korea are being treated less like experimental venues and more like critical financial infrastructure, with oversight calibrated accordingly.

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