South Korea tightens scrutiny of crypto, targeting market manipulation.

South Korea's financial regulator announced it will tighten oversight of the cryptocurrency market and impose harsher penalties on financial institutions when incidents related to IT systems occur. This move comes after a series of recent high-profile incidents that have raised concerns about market integrity and consumer rights.

According to Yonhap News Agency , the Financial Supervisory Service (FSS) has announced its annual policy program, which includes plans to investigate high-risk activities in the crypto market and implement punitive measures for IT infrastructure incidents across the financial industry.

Regarding crypto market oversight, the FSS stated that it will focus on scrutinizing behaviors that disrupt market order, including price manipulation by large traders (often referred to as "whales"), as well as artificial price-pumping tactics for Token whose deposits/withdrawals are temporarily suspended on certain exchanges. Additionally, the agency is targeting rapid price "pumps," manipulation through API-based order placement, and the dissemination of misinformation via social media.

This move comes after a recent incident at Bithumb – South Korea's second-largest crypto exchange – where the exchange allegedly mistakenly transferred 620,000 BTC (approximately $44 billion) to hundreds of users in an Airdrop event on Friday night, according to a BBC report. Bithumb said it has recovered 99.7% of the mistakenly transferred bitcoin.

In other news, the FSS announced it has established a working group to prepare for the enactment of the Digital Asset Basic Act – a key law in the second phase of the crypto regulatory framework. According to Yonhap, this group will develop disclosure standards for Token Issuance and listing support, as well as draft a licensing manual for digital asset service providers and stablecoin issuers. The final version of the bill is expected to appear in the first quarter of this year.