South Korea Uses AI to Crack Down on Crypto Violations
South Korea is strengthening oversight of its cryptocurrency market by deploying artificial intelligence to detect suspicious trading and proposing new powers for its financial intelligence agency.
The Financial Supervisory Service launched an AI-based monitoring system on August 20 to identify market manipulation and other forms of unfair crypto trading in real time. The system analyses transaction data, public information and activity surrounding suspicious digital assets.
It can detect unusual price movements, sudden trading-volume spikes and possible wash trading. It can also examine related news, online posts, videos, subtitles and audio to identify potential false information, illegal pre-trading or attempts to manipulate markets.
The system can automatically prepare analytical reports, allowing regulators to request additional trading information from exchanges when further investigation is needed. The technology expands on the FSS's earlier VISTA platform for investigating suspected crypto manipulation.
At the same time, South Korean lawmakers have proposed giving the Financial Intelligence Unit greater authority to investigate unregistered crypto businesses.
The proposed legislation would allow people to report suspected violations directly to the FIU and enable the agency to investigate, analyse cases or request action from law-enforcement authorities.
The move follows concerns about regulatory gaps. According to figures cited in the report, police suspended investigations or preliminary inquiries into 23 of 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025.
The proposed law is currently with the Political Affairs Committee and must go through further debate before reaching the National Assembly.
Together, the AI surveillance system and proposed legislation signal South Korea's push for tighter crypto regulation, stronger action against market manipulation and greater oversight of unregistered digital-asset businesses.
