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The Financial Services Commission and the Financial Supervisory Service announced on the 23rd that they had decided to indict or refer suspects in virtual asset market unfair trading cases to investigative agencies at a regular meeting.
These are 4 cases, including 3 cases of ultra-short-term market manipulation and 1 case of illegal trading and market manipulation by executives and employees of a virtual asset operator.
Among these, two cases involved individuals A and B, who are brothers, being detected for ultra-short-term market manipulation of multiple virtual assets using the same method, and were referred to investigative agencies.
They rapidly accumulated assets, then used an automated trading program (API) to repeatedly buy and sell the same small quantities at market price, attracting buying interest, while also driving up prices with high-priced limit buy orders. Subsequently, once their target price was reached, they sold off all holdings, realizing illicit gains.
Mr. C was indicted on charges of market manipulation, even mobilizing accounts under other people's names.
It was found that he pre-purchased large quantities of highly volatile assets just before manipulation and then drove up the price with high-priced limit buy orders from his own accounts.
Additionally, to circumvent the API order frequency limits of virtual asset exchanges, he repeatedly conducted high-frequency, small-amount market price API trades using accounts under other people's names, thereby attracting trading activity.
In this process, he submitted sell orders at high prices in advance, then gradually raised the price, causing the existing sell orders to be executed sequentially, thereby disposing of his holdings and obtaining illicit gains.
Furthermore, a case where executives and employees of a virtual asset operator inflated trading volume through wash trading to list on a major exchange was referred to investigative agencies.
They attempted to list the virtual assets they issued and operated on major domestic virtual asset exchanges multiple times but failed due to reasons such as insufficient trading volume. They then listed them on relatively easier-to-list medium-sized exchanges first, inflated the trading volume through wash trading, and falsely met the listing maintenance requirements.
To make it appear as if the assets were actively traded on the exchange, they hired professional traders and mobilized nominee accounts under the names of executives and employees, manipulating trading volumes by exchanging assets between accounts.
The trading volume inflated in this manner accounted for over 90% of the total trading volume, and this was used to attract investors and also as a qualification requirement for listing on major exchanges.
This virtual asset issuing foundation was merely a shell company established in a tax haven, and the actual issuance and operation were handled by domestic corporations established by the suspects. Key individuals related to the foundation listed in the white paper were also confirmed to have unclear identities or to be fictitious.
The Financial Services Commission warned, "If the trading volume and price of a virtual asset that previously had low trading volume suddenly surge without reason, or if trading volume is concentrated only on a specific exchange, artificial trading may be involved, so caution is needed when investing."
They added, "Going forward, financial authorities will strengthen monitoring of unusual transactions, such as trading patterns similar to the cases addressed in this action, and will strictly respond if unfair trading practices are found, thereby establishing a sound order in the virtual asset market."
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