South Korean Prosecutors Uncover Fusionist (ACE) Token Price Manipulation Scheme

In what has become one of the most significant cases in South Korea’s crypto market, the Seoul Southern District Prosecutors’ Office has exposed an elaborate price manipulation scheme involving the Fusionist (ACE) token, which is down 13% in the past 24 hours.

According to a local source, Lee and Kang, who allegedly orchestrated artificial price inflation on the Bithumb exchange, accumulated illicit profits amounting to 7.1 billion won ($4.8 million).

The case, categorized as a top priority under the newly enacted Virtual Asset User Protection Act, was placed on an expedited “Fast Track” for prosecution in October 2024.

The investigation revealed that the duo engaged in sophisticated methods to deceive investors and inflate trading volumes, effectively distorting market realities to their advantage.

On April 3rd, at the third trial hearing at the 14th Criminal Division of the Seoul Southern District Court, prosecutors detailed the methods employed by the accused, shedding light on two primary tactics called “’hit’ order strategy and fake buy orders.”

These manipulative trading practices not only misled investors but also artificially bolstered ACE’s market performance, triggering widespread trading activity based on fraudulent signals.

One of the key methods employed by Lee and Kang was the implementation of ‘hit’ orders.

This involved submitting limit buy orders at a price higher than the current market rate while simultaneously placing limit sell orders below market value.

This technique ensured that trades were executed unconditionally, effectively inflating the trading volume.

Prosecutors likened this to a form of “bicycle trading,” where an illusion of heightened market activity is created to lure in unsuspecting investors.

By avoiding direct self-trading, an act punishable under the Virtual Asset User Protection Act, the perpetrators circumvented legal consequences while achieving the same effect, which is manipulating market sentiment and artificially increasing trading activity.

The impact of this tactic was evident on July 22, 2024, when ACE’s trading volume on Bithumb skyrocketed nearly 15-fold in just one day, from an average of 160,000 to approximately 24.05 million.

Notably, at the time of writing, the Fusionist token is down 94.2% in the last year and 33.8% in the previous month.

Alarmingly, an estimated 88.69% of these transactions were identified as manipulated.

In addition to ‘hit’ orders, the accused employed a strategy involving fake buy orders.

This method involved placing multiple low-price purchase orders at predefined intervals 3%, 5%, 7%, 9%, and 11% below the most recent transaction price.

These orders were then systematically canceled within seconds before they could be executed, creating a misleading impression of strong buy-side interest.

By repeating this cycle over an extended period, the manipulators effectively induced a false sense of demand, enticing real investors into entering the market.

The prosecution’s findings revealed that between July 28, 2024, and August 5, 2024, these false buy orders escalated, with cancellation rates nearing 100%.

More strikingly, 80-90% of all purchase orders on Bithumb during this period were linked to these deceptive tactics.

This case represents the first time the Virtual Asset User Protection Act has been enforced through the “Fast Track” prosecution process.

This case has also coincided with broader regulatory shifts in South Korea’s crypto sector.

The country’s Financial Services Commission (FSC) has recently indicated a potential policy change that could allow foreign investors to access domestic exchanges under stringent anti-money laundering (AML) requirements.

South Korea’s top financial regulator is signaling a policy shift that could allow foreign investors to access the domestic crypto market.#SouthKorea #Cryptohttps://t.co/tUb7C4hv8e

This proposed shift responds to global competitive pressures and a desire to curb market anomalies like this current case.

Looking forward, with the prosecution making a strong case against Lee and Kang, the outcome of this trial could set a precedent for future cryptocurrency fraud cases in the country.

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