Catenaa, Sunday, January 11, 2026-South Korean regulators are evaluating a new enforcement measure that would allow authorities to freeze crypto accounts before suspected gains are withdrawn, aiming to curb market manipulation.
The Financial Services Commission (FSC) discussed the “payment freeze” system in November while reviewing a virtual asset manipulation case.
Current rules require a court warrant to seize assets, a process that can take time, allowing suspects to move funds into personal wallets or overseas platforms before charges are filed.
Investigators have identified schemes including front-running, automated wash trading, repeated high-priced buy orders, and coordinated profit-taking.
Regulators argue that freezing accounts early would prevent suspects from monetizing or hiding profits during investigations.
The proposed approach mirrors a mechanism already used in the stock market under amendments to the Capital Markets Act in April 2025, which enabled authorities to suspend payments in suspected unfair trading cases.
In a September 2025 stock market case, regulators froze 75 accounts, halting withdrawals of both realized and unrealized gains. Officials cited that case as a model for digital assets, noting cryptocurrencies are easier to conceal once moved off exchanges.
South Korea’s first phase of crypto legislation, the Virtual Asst User Protection Act, took effect in July 2024, focusing on investor protection and reporting obligations for exchanges.
The second phase, still in development, is expected to address stablecoins, market abuse, and enforcement gaps.
The push for stronger regulatory tools coincides with expanded oversight, including the July 2025 formation of a Joint Response Unit for major manipulation cases and AI-enhanced surveillance systems. Recent measures also examine holding exchanges to bank-level liability standards following the $30 million Upbit hack, signaling a more aggressive approach to crypto regulation.
