South Korea is stepping up its crypto oversight with regulators planning to deploy AI-tools to catch fraud activity.
Local media reports from Monday highlight that the country’s Financial Supervisory Service (FSS) is upgrading its trading analysis platform, VISTA, by adding advanced AI tools to spot unfair trading more quickly and accurately.
Currently, VISTA scans large amounts of trade-related information, detecting unusual patterns and even visualizing trade to make the necessary interventions in the market. Now, with the entry of AI into the picture, the FSS hopes to identify suspicious trades in the market, making the market a safer place for everyone to operate in.
The development coincides with the nation’s efforts to stay at the top of the crypto game in the world of cryptocurrency with the help of technology.
FSS eyes easier spotting of crypto frauds with AI
South Korea’s FSS has previously upgraded its crypto market surveillance by expanding computing power with high-performance CPUs and GPUs in December, enabling AI algorithms to process shared and distributed trading data.
Building on this infrastructure, the FSS developed its own trade detection algorithm to automate previously manual tasks.
The system computes anomalous patterns and identifies anomalous activity by processing trading data on various time scales, ranging from seconds to months.
Together with regional cryptocurrency exchanges, the AI system operates around-the-clock to detect abrupt changes in price or volume as well as wash trades, spoofing, and other coordinated trades. Accounts flagged as suspicious can be centrally referred for investigation, and new regulations allow authorities to act even before profits are realized, strengthening enforcement and deterrence in the crypto market.
South Korea treats crypto market abuse as criminal offense
South Korea’s crypto regulations are built on existing capital markets laws, which treat market manipulation, insider trading, and fraud as criminal offenses.
Under the Financial Investment Services and Capital Markets Act, offenders can face imprisonment and substantial fines according to their illegal gains and other administrative sanctions.
In extreme circumstances, such as in cases of large-scale and repeated offenses, an offender can be sentenced to life imprisonment.
Fines under criminal law can now be four to six times higher than the profit earned or loss avoided, and administrative fines can reach billions of won if gains are difficult to measure.