South Korea Deploys AI to Bust Crypto Market Manipulation

Algorithms Track ‘Racehorse’ and ‘Cage’ Schemes

South Korea’s financial regulator has reportedly deployed a real-time, artificial intelligence-powered market surveillance system to detect unfair trading and price manipulation across the country’s cryptocurrency markets. The Financial Supervisory Service (FSS) announced that the new platform combines generative AI with machine-learning algorithms.

The initiative aims to overcome severe resource constraints faced by human investigators, who must monitor thousands of digital assets trading around the clock across multiple exchanges. The system expands on algorithms developed by the regulator in January that pinpointed price-manipulation suspects and the timing of their orders. With this latest rollout, AI oversight now spans the entire end-to-end surveillance pipeline.

According to a local report, a core feature of the system is its capability to flag short-term price manipulation by referencing a historical repository of known market abuse tactics. Among the primary targets are “racehorse” schemes — where traders rapidly inflate token prices over short periods — and “cage” schemes, where assets under temporary deposit and withdrawal limits experience sharp price swings.