South Korea’s FSC targets ‘kimchi coins’ crypto whales in price manipulation inquiry

Two whale investors, one who exploited price gaps between domestic and overseas exchanges, and another who was involved in rapid-fire bot trading on locally issued tokens known as “kimchi coins” are being targeted by South Korea’s Financial Services Commission. 

South Korea’s Financial Services Commission (FSC) sent the two cryptocurrency price manipulation cases to prosecutors on July 1.

How South Korean whales manipulated prices 

The FSC has spent 2026 tightening its grip on the country’s crypto market after a string of exchange failures. It voted at its 12th regular meeting to report two cases involving crypto market manipulation to investigative authorities. 

The first case involves an investor who spent tens of billions of won over roughly two months and accumulated close to half of the global circulating supply of a token listed on both Korean and foreign platforms. 

After building a dominant position, the investor pushed the price higher on overseas exchanges first, and because arbitrage traders and automated systems tend to sync prices across platforms, the artificial spike led to the increase of domestic prices too.

The FSC said the investor lost money on the foreign exchange side but more than made up for it domestically as Korean retail investors absorbed the damage.

The second case is regarding tokens issued by Korean projects that trade almost entirely on domestic exchanges, called kimchi coins. These low-liquidity assets are particularly vulnerable to manipulation because a relatively small amount of capital can move their prices.

The suspect bought a large amount of a specific token ahead of time and then used API access to quickly place multiple market buy and sell orders within a single second. The rapid-fire orders created the appearance of active trading. 

Simultaneously, the suspect placed buy orders on the website at prices more than ten times above the lowest selling price.

Once outside buyers entered the market chasing the apparent momentum, the suspect sold in tranches and locked in profits. The Financial Supervisory Service uncovered the scheme through a planned investigation.

South Korea’s FSC warns retail crypto investors 

The commission has told investors to avoid chasing tokens whose price and volume spike without a clear reason. It specifically flagged the risk of “pump and dump” patterns in assets where a single large holder or a small cluster of accounts dominates trading volume. A sudden selloff by those holders can trigger sharp losses for latecomers.

The regulator said it plans to strengthen alerts that flag when trading in a given asset is concentrated in a small number of accounts. It also intends to expand disclosure around large-scale accumulation and disposal by whale investors.

FSC scrutiny is on markets

In April, the FSC ordered all five major Korean exchanges to start reconciling their internal ledgers against actual wallet balances every five minutes, after Bithumb’s $40 billion payout error in February, as Cryptopolitan previously reported. 

The same month, the commission implemented standardized withdrawal delay rules after finding out that 59% of fraudulent crypto transactions between June and September 2025 exploited inconsistent exception policies across exchanges.

Cryptopolitan also reported that in January, the FSC outlined plans to let listed companies and registered professional investors buy crypto for the first time since 2017. However, holdings will be capped at 5% of equity capital.