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South Korea’s financial watchdog has deployed advanced artificial intelligence to automatically detect cryptocurrency market manipulation, marking a significant shift toward data-driven enforcement as digital asset trading grows increasingly sophisticated.
Enhanced Detection Capabilities
The Financial Supervisory Service announced Monday it has upgraded its Virtual Assets Intelligence System for Trading Analysis (VISTA) with an automated detection algorithm capable of identifying potential price manipulation periods without human intervention. The new system employs a moving window grid search technique that examines every possible sub-period within trading datasets, eliminating the need for investigators to manually identify suspicious timeframes.
Performance tests on completed investigation cases demonstrated the upgraded system successfully detected all previously identified manipulation periods while flagging additional suspicious intervals that traditional analysis had missed. This comprehensive approach allows for exhaustive analysis of potential manipulation windows that investigators previously had to identify through manual processes.
Budget and Future Enhancements
The FSS has secured a budget of 170 million won ($116,000) for 2026 to fund further AI performance upgrades, with additional features planned for implementation in phases through the end of 2026. These planned enhancements include tools to automatically identify networks of coordinated trading accounts, analyze anomalous texts related to trading across thousands of crypto assets, and trace the origin of funds used in market manipulation schemes.
The surveillance system upgrade aligns with the regulator’s broader objective to strengthen law enforcement capabilities in the cryptocurrency sector. On January 6, local news agency Newsis reported the Financial Services Commission was evaluating a payment suspension system designed to block transactions before suspects can launder illicit proceeds.
Broader Market Surveillance Push
The cryptocurrency surveillance initiative coincides with expanded AI-based monitoring across South Korea’s capital markets. The Financial Services Commission announced Monday that the Korean Exchange will begin using an AI-powered market monitoring system to enhance early detection of stock price manipulation.
This multi-pronged approach reflects South Korea’s commitment to leveraging artificial intelligence for comprehensive financial market oversight, addressing both traditional securities and emerging digital asset markets through automated surveillance technology.
