South Korean Prosecutors Crack Down on Fusionist (ACE) Token Price Manipulation

South Korean prosecutors have arrested two individuals, Lee and Kang, for orchestrating a sophisticated price manipulation scheme involving the Fusionist (ACE) token. This case marks the first prosecution under the newly enacted Virtual Asset User Protection Act, highlighting the country’s aggressive stance against crypto fraud.

• Fusionist (ACE) token manipulation scheme uncovered
• Two individuals arrested, amassed 7.1 billion won in illicit profits
• First case prosecuted under Virtual Asset User Protection Act
• Manipulation tactics included ‘hit’ orders and fake buy orders

The duo allegedly manipulated the ACE token’s price on the Bithumb exchange, raking in a staggering 7.1 billion won ($4.8 million) in illicit profits. The case, categorized as a top priority, has been placed on a “Fast Track” for prosecution, set to commence in October 2024. This swift action by the Seoul Southern District Prosecutors’ Office sends a clear message: the era of unchecked crypto manipulation is over.

The manipulation tactics used by Lee and Kang were nothing short of cunning. They employed ‘hit’ orders, a strategy involving simultaneous limit buy and sell orders at different prices, and fake buy orders placed at intervals below the market price, only to be canceled before execution. These maneuvers artificially inflated trading volumes, creating a false sense of demand and misleading investors. On July 22, 2024, the trading volume of ACE on Bithumb surged nearly 15-fold in a single day, with a staggering 88.69% of transactions identified as manipulated.

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

Prosecutors likened this to a form of ‘bicycle trading,’ where an illusion of heightened market activity is created to lure in unsuspecting investors. This case not only highlights the dark side of the crypto world but also showcases the potential of blockchain technology to track and expose such fraudulent activities.

The Fusionist (ACE) token has been on a downward spiral, down 13% in the past 24 hours, 94.2% in the last year, and 33.8% in the previous month. This volatility and decline reflect the broader market’s reaction to the manipulation scandal and the uncertainty it has caused.

Against this backdrop, South Korea’s Financial Services Commission (FSC) is considering policy changes to open the crypto market to foreign investment, albeit under stringent anti-money laundering (AML) requirements. This move could signal a new era of regulatory evolution, balancing the need for investor protection with the desire to remain competitive in the global crypto landscape.

The Virtual Asset User Protection Act, which took effect on July 19, 2024, mandates virtual asset service providers (VASPs) to segregate user deposits, maintain records, obtain insurance, establish reserve funds, and retain transaction records for 15 years. This comprehensive approach aims to regulate unfair trading practices and enhance user protection in the virtual asset industry.

As the crypto world continues to evolve, cases like this serve as a reminder of the challenges and opportunities that lie ahead. While the potential for fraud and manipulation exists, so too does the potential for innovation and growth. The key is to strike a balance between fostering a vibrant crypto ecosystem and protecting investors from the dark side of the market.

Here are some key takeaways and questions to consider:

• What was the nature of the price manipulation scheme involving the Fusionist (ACE) token?

  The scheme involved ‘hit’ orders and fake buy orders to artificially inflate trading volumes and mislead investors, resulting in illicit profits of 7.1 billion won ($4.8 million).

• How has the South Korean government responded to this case?

  The case has been prioritized under the Virtual Asset User Protection Act and placed on a “Fast Track” for prosecution, reflecting a strong governmental response to cryptocurrency fraud.

• What are the potential broader implications of this case for the South Korean crypto market?

  The case could set a precedent for future cryptocurrency fraud cases and may influence regulatory policies, including the potential opening of the market to foreign investors under strict AML requirements.

• What tactics were used to manipulate the Fusionist (ACE) token’s price?

  The manipulators used ‘hit’ orders, involving simultaneous limit buy and sell orders at different prices, and fake buy orders, which were placed and canceled to create a false sense of demand.

• How has the Fusionist (ACE) token performed recently?

  The token is down 13% in the past 24 hours, 94.2% in the last year, and 33.8% in the previous month, reflecting significant volatility and decline.