South Korea deploys AI to detect pump and dump schemes across stocks and crypto markets

South Korea enlists AI to spot pump and dump schemes

Main stock exchange targets shares, government agency looks for crypto crooks South Korea's government and main stock exchange have developed and deployed AI-powered tools to detect schemes that aim to send the price of cryptocurrencies and shares soaring so that unscrupulous investors can cash in. Schemes of this sort are known as "pump and dump," and see investors acquire shares or virtual assets, then spread information they hope will induce others to buy them. If the scheme succeeds, the price of the targeted assets often rises. Sadly, the information spread by schemers is usually bunk, but by the time new investors discover that the perpetrators have sold their assets at a handy profit and disappeared. Pump and dump schemes are nothing new, but social media gave their perpetrators a new way to reach the gullible. Which is probably why the tech developed by Korea Exchange (KRX, the country's main bourse) can scour online posts, YouTube, and even reported cases of spam text messages for evidence of pump and dump schemes. The AI analyzes material it finds online, considers recent stock price movements, and then automatically produces reports indicating stocks that may be the subject of price manipulation schemes so that South Korean authorities can investigate further. Regulator the Financial Services Commission (FSC) welcomed the tool and said it will reduce the time taken to analyze suspect situations. Also on Monday, South Korea's Financial Supervisory Service (FSS) - the FSC's enforcement arm - announced it has enlisted AI to help it investigate suspicious cryptocurrency trades. The FSS says it already operates a Python-based tool that can conduct large-scale data analysis, automatic calculation of abnormal trading indicators, and visualize trading patterns. Those tools, however, struggle to keep up with high-frequency trades made using crypto-marts' APIs. The FSS is therefore working on unspecified AI algorithms to improve its performance, and has even acquired two servers "equipped with high-performance CPUs and GPUs" so it can put AI to work sniffing out dodgy crypto deals. Like other nations, South Korea operates a whistleblower scheme that encourages the public to report instances of fraudulent stock trading. FSC officials recently proposed increasing the rewards paid to whistleblowers in the hope it will see more come forward. South Korea has also had its share of crypto messes, including the $40 billion meltdown of Terraform Labs, which was led by one of its citizens, Do Kwon. ®

South Korea's FSS Details AI Upgrades for Crypto Abuse Detection

The Financial Supervisory Service said automated models now scan crypto trading activity across timeframes, reducing reliance on manual investigations. South Korea's financial watchdog has expanded the use of artificial intelligence to monitor digital asset markets, signaling a shift toward automated, data-driven enforcement as trading activity grows more complex. On Monday, the country's Financial Supervisory Service (FSS) said it has upgraded its Virtual Assets Intelligence System for Trading Analysis (VISTA), a model used to investigate unfair crypto trading. An automated detection algorithm has been added, the FSS said, which can spot potential price-manipulation periods without manual intervention. The FSS said the new algorithm uses a sliding-window grid search technique to examine every possible sub-period within a trading dataset. This approach is meant to enable exhaustive analysis of potential manipulation windows that investigators previously had to identify manually. The watchdog said that performance tests on completed investigation cases showed that the system detected all previously identified manipulation periods, while also flagging additional suspicious intervals that were difficult to spot with traditional analysis. The FSS also said it secured a 170 million won ($116,000) budget for 2026 for further AI performance upgrades, with additional capabilities to be rolled out in different stages through the end of 2026. Planned upgrades include tools to automatically identify networks of coordinated trading accounts, analyze abnormal trading-related text across thousands of crypto assets and trace the origin of funds used in manipulation. Related: South Korea's Coinone weighs stake sale amid Coinbase speculation The AI surveillance system upgrade aligns with the regulator's aim to enhance enforcement capabilities in the crypto space. On Jan. 6, local outlet Newsis reported that the FSC was considering a payment suspension system that would block transactions before suspects can launder ill-gotten gains. The country's crypto surveillance push also comes alongside broader efforts to expand AI-based monitoring across South Korea's capital markets. On Monday, the Financial Services Commission (FSC) announced that the Korea Exchange will begin operating an AI-driven market monitoring system to strengthen early detection of stock price manipulation.

Korea bolsters AI capabilities to tackle crypto market manipulation - The Korea Times

The Financial Supervisory Service (FSS) is upgrading an artificial intelligence (AI)-powered platform for virtual asset surveillance as part of efforts to crack down on increasingly sophisticated market manipulation, the watchdog said Monday. The platform, Virtual Assets Intelligence System for Trading Analysis (VISTA), is designed to process massive volumes of trading data, automatically flag abnormal transactions and visualize trading behavior. The financial watchdog said VISTA has already become a core investigative tool in crypto-related enforcement cases. Last December, FSS expanded its computing capacity by installing two new servers equipped with high-performance central and graphics processing units. Leveraging this infrastructure, the agency has developed an automated detection model that identifies suspected price-rigging periods without manual intervention. The system scans every possible trading interval -- from seconds to months -- and calculates abnormal trading metrics across all segments, allowing authorities to uncover manipulation patterns regardless of how frequently they occur. "We will expand AI-based analytical capabilities in stages through the end of this year to detect illegal trading earlier and accelerate investigations," an FSS official said. "To that end, a 170 million won ($116,000) budget has been secured for 2026 to upgrade servers and enhance the performance of AI surveillance systems." The plans include rolling out new tools designed to automatically identify networks of suspicious accounts involved in coordinated price manipulation. At the same time, the watchdog aims to introduce analytics capable of processing and interpreting abnormal trading-related text across thousands of crypto assets. In a separate move, the Financial Services Commission (FSC) and the Korea Exchange said they will launch an AI-driven cyber surveillance system on Tuesday to strengthen early detection of stock price manipulation and other market abuses. The system was developed in response to a rise in online misconduct, including the spread of false information and coordinated stock promotion through online forums, social media platforms and YouTube in attempts to exert undue influence on stock prices. It analyzes digital content such as posts, spam text message reports and videos alongside stock price movement data. Authorities will review securities flagged by the system and conduct in-depth investigations when necessary. "We will continue expanding the use of AI to combat unfair trading in capital markets," an FSC official said.