The Korea Financial Supervisory Authority has launched a real-time AI monitoring system for the encryption market to identify suspected price manipulation, counter-trading and synergetic behaviour. The system scans transactional data, news, exchange announcements and web discussions at the same time, and the investigators review reports generated by AI and decide whether to enter into in-depth analysis or formal investigations.
First sift abnormal prices and trades.
On August 20, the Korea Financial Supervisory Authority stated that the platform combines the generation of AI and machine learning, with the aim of automating part of the process that would have relied on manual review of a large amount of transaction data. The system will first identify price or trade-off abnormally volatile tokens from real-time transaction information, and then compare them with the pattern of past investigations conducted by the regulator.
Regulators cited two typical models. One is a “horse racing” type, where tokens rise rapidly within a short period of time; the other is a “cage medium”, where asset prices continue to rise significantly during periods of restriction or suspension. For transactions suspected to be counter-trading or collusive, the regulator will also screen assets and time periods requiring further verification, taking into account the Benfu rules and machine learning model.
AI will check the match.
When a given token is abnormally volatile, the Generating AI continues to check the news and exchange announcements to see if there are reasonable catalysts. Price fluctuations may be explained by, for example, currency alerts, network upgrades or other confirmed events; in the absence of clear reasons for large price changes, regulators may require more detailed order and account data from the relevant exchange.
In addition to open market information, the system uses complaints, reports and media reports to determine whether an early warning is worth in-depth analysis. The generation AI will then compile the elements of price changes, trade-off changes, and possible catalytic factors into standardized reports for investigators to make their next judgement.
Over 40 cases investigated within two years
Before the system went online, Korea had been implementing the Virtual Asset User Protection Act for two years. The Act, which entered into force on 19 July 2024, requires service providers to separate the customer ' s assets from the company ' s assets and to deposit the user ' s deposits in the bank, while giving the supervisory authorities the power to inspect the platform, combat insider transactions, manipulate inverts and prices.
As previously disclosed, more than 40 cases of suspected unfair transactions have been examined by the Korean regulatory authorities within the first two years of the Act ' s implementation, of which more than 30 have been notified or referred to investigative bodies, identifying 25 suspects. In the official caliber, the average illegal profit in the case was approximately 1.4 billion won.
In May, the Digital Asset Exchange Alliance, which is the main trading platform in Korea, also tightened API key management rules, requiring member platforms to monitor suspected key-sharing, enable the IP white list and invalidate the key after warning and user verification. The regulator had previously estimated that API-based transactions accounted for about 30 per cent of local Korean encrypted trade.
Follow-up will be added to financial flows and chain tracking
The Korea Regulatory Authority is also advancing the second phase of digital asset legislation. On July 29, the Korea Financial Services Commission introduced a consolidation bill to consolidate 10 digital asset proposals pending consideration, covering such elements as currency stabilization, exchange, information disclosure, internal controls and systemic resilience.
According to the Financial Supervisory Authority, the existing AI platform will be followed up by a cross-exchange financial flow analysis and chain transaction tracking function, but the 20 August announcement has not yet given a specific lead time. The regulator indicated that the system would help a limited workforce to deal more quickly with increasingly complex unfair transactions.