South Korea expands AI crypto market surveillance

South Korea’s Financial Supervisory Service has expanded its use of artificial intelligence to monitor crypto markets, aiming to automate the detection of price manipulation as trading grows more complex.

The watchdog said it upgraded its Virtual Assets Intelligence System for Trading Analysis to include an automated detection algorithm that can identify suspicious trading periods without manual intervention.

The FSS said the new system uses a sliding-window grid search technique that scans all possible sub-periods in trading data, improving accuracy compared with investigator-led analysis.

Performance tests on completed cases showed the system detected all previously identified manipulation periods while also flagging additional suspicious activity, the regulator said.

The FSS has secured a 170 million won budget for 2026 to further enhance its AI capabilities, including tools to detect coordinated trading networks and trace the origin of illicit funds.

The upgrade aligns with broader regulatory efforts, including discussions around pre-emptive payment suspensions to prevent suspected manipulators from laundering gains.

South Korea is also expanding AI-based oversight across traditional markets, with the Financial Services Commission planning to deploy similar systems at the Korea Exchange to monitor stock manipulation.