S. Korea’s FSS to tighten crypto oversight — targeting gating, whale trades and API misuse

South Korea’s Financial Supervisory Service (FSS) will step up crypto-market oversight in 2026, targeting conduct that pushes prices away from normal market conditions. Governor Lee Chang-jin told Yonhap the FSS will focus on coordinated manipulation, large “whale” trades, exchange suspensions of deposits/withdrawals known as “gating,” misuse of market-order APIs, and price moves during exchange maintenance. The regulator also flagged efforts to influence markets via coordinated social‑media misinformation. To bolster enforcement the FSS will expand automated monitoring — adding short-interval anomaly detection, account-clustering and range flags, API‑pattern monitoring, and text-analysis to detect organized narratives. The agency has upgraded its VISTA surveillance with an AI module to flag suspected manipulation and will escalate exchange incidents more rapidly into formal probes. This push follows a Bithumb promotional glitch that briefly distributed bitcoin (nearly all later recovered) and sharp price swings during maintenance on platforms such as Upbit, prompting urgent reviews by the Financial Services Commission and other bodies. The FSS has formed a taskforce to prepare for a forthcoming Digital Asset Basic Law (Phase 2), aiming to tighten disclosure, exchange supervision and licensing standards. Implications for traders: heightened surveillance should reduce blatant exchange-level manipulation and gating-driven volatility but will increase scrutiny on large OTC and API-driven orders, make rapid short-term price moves more likely to trigger probes, and could bring new rules that constrain certain execution strategies. Primary keywords: crypto oversight, market manipulation. Secondary keywords: gating, whale trading, API trading, automated monitoring, AI surveillance.