South Korean watchdog expands AI systems to track crypto manipulation

South Korea’s financial watchdog just dropped the deets on its AI-powered crypto surveillance upgrade — and it’s about to get way harder to pull off shady trades. The Financial Supervisory Service (FSS) announced on Monday that it’s supercharged its Virtual Assets Intelligence System for Trading Analysis (VISTA) with automated detection algorithms that can spot price manipulation without human intervention.

The new system uses a sliding-window grid search technique that analyzes every possible sub-period within trading data — basically scanning for manipulation windows that investigators used to have to find manually. Performance tests showed it caught all previously identified manipulation periods AND flagged additional suspicious intervals that traditional methods missed.

The FSS isn’t stopping here — they secured a 170 million won ($116,000) budget for 2026 for more AI upgrades, with new capabilities rolling out through the end of next year. Planned features 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.

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This AI surveillance push aligns with the regulator’s broader crackdown on crypto market abuse. On Jan. 6, local reports revealed the FSC was considering a payment suspension system that would block transactions before suspects can launder ill-gotten gains — basically freezing accounts at the first sign of trouble.

South Korea’s crypto surveillance expansion is part of a larger AI monitoring push across capital markets. On the same day, the Financial Services Commission announced that the Korea Exchange will begin operating an AI-driven market monitoring system to strengthen early detection of stock price manipulation.

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