South Korea’s financial watchdog is planning to launch a probe into suspected crypto price manipulation involving automated trading programs, according to Maeil Business Newspaper.
The Financial Supervisory Service, or FSS, said it had identified a range of unfair trading patterns linked to application programming interfaces, known as APIs, which allow investors to place orders automatically without manually logging into an exchange system.
API-based trading has become widely used in the crypto market and now accounts for more than 30% of total trading value, the regulator said.
Behind the Sudden Moves
According to the FSS, one common tactic involved repeatedly placing tiny market buy and sell orders to create the appearance of active trading and draw in retail investors.
In one case disclosed by the regulator, a suspect repeatedly submitted market orders worth just 5,000 to 10,000 won through an API to make trading appear brisk. At the same time, the trader manually placed high-priced limit buy orders to push the token’s price upward. Once individual investors entered the market and prices rose further, the suspect sold holdings for a profit.
The watchdog also described another suspected scheme in which a trader set a sell order at a target price well above the original purchase price, then used an API to keep submitting aggressive buy orders until the market price was driven up to that level.
Other suspected methods included placing large buy orders below the market price and then pulling them to make demand look stronger than it was, with the regulator also pointing to trading between linked accounts designed to boost volume and give a misleading picture of market activity.
Warning Signs for Traders
The FSS cautioned API users against blindly using high-frequency trading codes shared in online forums and social media, saying such patterns could be treated as abnormal orders or market manipulation.
For ordinary investors, the regulator advised caution when prices and trading volumes spike sharply without a clear reason. It said that concentrated high-frequency API trading is especially common around exchange-specific reset windows, making sudden jumps during those windows particularly risky.
The watchdog also warned users to safeguard their API keys, saying leaked credentials could leave account holders unintentionally involved in illicit activity such as money laundering and expose them to criminal punishment as accomplices.
The FSS added that it would investigate accounts that showed excessively repetitive trading patterns and take action when it found wrongdoing.
