API Trading Now 30% of Crypto Volume, FSS Warns

On Monday the Financial Supervisory Service reported that API-driven orders account for roughly 30% of buy-and-sell turnover on South Korean crypto platforms and announced targeted investigations into suspicious automated activity. The regulator warned that some automated tools are being used to inflate volumes and manipulate prices.

A review by the agency found trading patterns consistent with market distortion. These included repeated small market orders that create the appearance of active trading, higher-priced limit orders placed to push prices up, spoofed orders and coordinated activity across multiple accounts. Regulators flagged accounts that placed large numbers of tiny trades and then sold into rising prices as retail investors entered the market.

The FSS outlined specific examples. In one instance, API-driven orders priced between 5,000 and 10,000 won were used to simulate trading before the trader sold as prices rose. In another, repeated higher-priced buy orders drove an asset toward a pre-set target price.

The agency will open focused probes of accounts showing excessive trade frequency, unusual order patterns or use of multiple accounts to coordinate activity. Enforcement actions, including sanctions where violations are found, were announced as a likely outcome of those probes.

Regulators also cautioned users against downloading or running high-frequency trading code shared online without understanding the risks. Investors were urged to avoid chasing assets that show sudden, unexplained spikes in price and trading volume.

The announcement comes amid a broader push to strengthen safeguards after a series of operational and fraud incidents. On April 7, exchanges were ordered to reconcile internal ledgers with actual asset holdings every five minutes after inspections revealed delayed balance checks and weaknesses in systems designed to halt trading. The Financial Services Commission reported that inconsistent withdrawal-delay exemptions allowed rapid fund transfers and that exempted accounts accounted for a majority of losses from voice phishing scams. A court decision on April 9 overturned a partial suspension of a major exchange operator, citing unclear rules and highlighting gaps in the legal framework. Separately, the central bank has proposed introducing crypto circuit breakers following earlier exchange incidents.

The FSS noted that automated trading itself is not illegal but that particular API-driven strategies may amount to market manipulation when they create false or misleading impressions of demand and price direction.