South Korea's Financial Supervisory Service (FSS) announced that API-based trading now constitutes approximately 30% of cryptocurrency turnover. The regulator issued a warning, citing concerns that automated tools are being used by some traders to inflate volumes and manipulate prices.
The FSS pointed to tactics such as repeated small trades, spoofed orders, and coordinated activity across multiple accounts. The agency plans targeted investigations into accounts exhibiting abnormal trading patterns via APIs, signaling increased scrutiny of automated trading.
This warning aligns with South Korea's ongoing efforts to combat crypto market abuse, even as regulatory frameworks continue to develop. The FSS outlined manipulation methods including creating the appearance of active trading with small orders and using higher-priced limit orders to artificially boost prices.
In one example, a trader allegedly used API orders to simulate activity before selling into a rising market. Another case involved a trader repeatedly placing higher-priced buy orders to drive prices to a target level. The FSS cautioned against using shared high-frequency trading code and advised investors to avoid assets with sudden, unexplained price and trading spikes.
The intensified oversight follows recent incidents, including orders for exchanges to reconcile ledgers with asset holdings and efforts to tighten safeguards against scams and fund movement by bad actors.