South Korea’s coin market is experiencing significant fluctuations, primarily driven by speculative trading activities exploiting regulatory gaps, as the new law to protect virtual asset traders will not come into force until February next year.

Upbit, the country’s largest cryptocurrency exchange, has seen two virtual currencies, Refereum and Dawn Protocol, as the top two coins with the highest daily price increases.

The two coins have seen swings of 20 to 40 percent in a single day led by speculative buying trends. Both coins are scheduled to be delisted next week. Typically, such coins experience rapid short-term surges followed by steep declines.

Recent events have also seen organized efforts from overseas entities taking advantage of the regulatory vacuum to disrupt the market and reap profits.

For instance, CyberConnect was listed on Upbit on August 22. Organized activities were witnessed a week after, involving a substantial trading volume of the coin.

According to coin market data tracker CryptoQuant, 38 percent of its total volume, or 4,169,441 coins, were transferred to Korea.

As a result, the coin’s price surged by 859 percent in just one week. Some market insiders speculate that organized groups engaged in wash trades among themselves to manipulate prices through their control of large volumes.

However, the coin’s value plummeted back to just one-eighth of its peak within a week following their mass sell-off during the price surge.

Local virtual asset providers have noticed such organized movements in the market, causing disruptions, but there is little that they can do, except for issuing warnings for concentration of trading by a small number of accounts.

There are also lack of sanctions and measures as regulatory authorities resort to careful monitoring, according to industry insiders. This has led to a consensus that the regulation of the virtual asset market is urgently needed.

By Choi Keun-do and Chang Iou-chung

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