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Authorities share major unfair trading cases and urge consumer caution
The Financial Supervisory Service (FSS) announced on the 13th that cases of unfair trading are increasing in the virtual asset market, where transactions are inflated using Application Program Interfaces (APIs) that automatically place orders based on pre-set conditions, and urged consumers to be cautious.
The FSS shared representative cases of unfair trading exploiting APIs and provided relevant consumer cautionary information. Transactions using APIs in the virtual asset market account for about 30% of the total buy and sell transaction value.
The FSS introduced cases of market manipulation by artificially inflating transactions through repeated market buy and sell orders using APIs.
Suspect A repeatedly placed small market buy and market sell orders at the 5,000 to 10,000 won level via API to make it appear as if trading was booming, while simultaneously submitting additional manual limit high-price buy orders to drive up the price. When general investors entered and the price further increased, Suspect A sold the virtual assets to realize profits.
Another suspect, B, also manipulated the market price by repeatedly submitting a sell order at a target price significantly higher than the price at which they purchased the virtual asset, and then using an API to repeatedly submit additional limit high-price buy orders to drive the price up to the target price.
Additionally, there were cases where APIs were used to repeatedly place and cancel fictitious buy orders to make it seem like there was a large volume of buy order remaining, or to repeatedly conduct wash trading between multiple accounts to distort market conditions.
The FSS urged API users not to indiscriminately use high-frequency short-interval trading codes shared in virtual asset communities or social media (SNS). This is because their transactions could be considered excessive abnormal orders, such as wash trading or short-interval trading, and thus deemed unfair trading.
The FSS also emphasized that general market participants should refrain from "chasing" trades if prices surge due to high-frequency transactions without a special reason, as there is a possibility that market manipulation forces exploiting APIs may be involved.
The FSS stated, "If accounts that have excessively repeated transactions using APIs to induce trading are identified, we will promptly conduct a special investigation and take strict measures."
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