South Korea expands AI to monitor crypto market manipulation
South Korea’s Financial Supervisory Service (FSS) has expanded its use of artificial intelligence to supervise digital asset markets, upgrading its Virtual Assets Intelligence System for Trading Analysis (VISTA) to enhance detection of unfair trading. The regulator said Monday that a new automated detection algorithm now scans trading activity to identify potential price-manipulation periods without manual review.
Shift from manual review to systematic oversight
The FSS said the algorithm applies a sliding-window grid search to evaluate every possible sub-period within a trading dataset. The method is designed to provide comprehensive coverage of potential manipulation windows that previously required investigators to pinpoint them manually.
According to the watchdog, performance tests using completed investigation cases showed the system detected all manipulation periods previously identified by investigators and also flagged additional suspicious intervals that were difficult to uncover with traditional techniques.
The FSS added it has secured a 170 million won ($116,000) budget for 2026 to further improve AI performance, with new capabilities scheduled to roll out in phases through the end of 2026. Planned enhancements include tools to automatically map networks of coordinated trading accounts, analyze abnormal trading-related text across thousands of crypto assets, and trace the origin of funds used in manipulation.
South Korea considers pre-emptive payment freezes in suspected manipulation
The AI surveillance upgrade aligns with broader enforcement initiatives in the crypto sector. On Jan. 6, local outlet Newsis reported that the Financial Services Commission (FSC) was considering a payment suspension mechanism to block transactions before suspects can launder illicit proceeds.
South Korea’s push to strengthen crypto oversight is occurring alongside wider adoption of AI-based monitoring in capital markets. On Monday, the FSC announced that the Korea Exchange will begin operating an AI-driven market monitoring system aimed at improving early detection of stock price manipulation.
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