South Korea’s financial authorities are moving closer to introducing a “payment freeze” system aimed at preventing suspects of virtual asset price manipulation from hiding or withdrawing illicit gains, according to officials familiar with the discussions.
The proposal was reviewed by the Financial Services Commission (FSC) during a regular meeting held in November last year, when regulators were deliberating whether to file criminal charges against individuals suspected of manipulating virtual asset prices.
Authorities are now said to be viewing the measure positively as a tool to strengthen enforcement in fast-moving crypto markets.
A payment freeze would allow regulators to temporarily restrict the outflow of funds from accounts linked to suspected market abuse. This includes blocking withdrawals, transfers, and payments before profits are concealed or moved offshore.
Unlike traditional asset seizures, the mechanism is designed to act quickly, targeting unrealized gains as well as funds already converted into cash.
In the case discussed by regulators, suspects are believed to have mobilized approximately 100 billion won (around $75 million) to influence virtual asset prices.
Authorities estimate that the group generated 40 billion won in profits, of which about 20 billion won had already been realized, while the remaining 20 billion won existed as unrealized gains tied to unsold holdings. By freezing accounts at an early stage, regulators were able to prevent the withdrawal or dissipation of those profits.
Financial authorities are now considering imposing penalties of up to 80 billion won, effectively doubling the estimated illegal profits, in line with existing punitive frameworks for market manipulation.
In parallel, regulators are coordinating with prosecutors and the courts to pursue confiscation or recovery of the original capital involved, estimated at around 100 billion won.
The potential introduction of a payment freeze reflects growing concern among South Korean regulators about the speed and complexity of virtual asset markets. Unlike traditional securities, crypto assets can be transferred instantly across borders, making post hoc recovery difficult once funds are moved.
If formally adopted, the system would mark a significant expansion of regulatory powers in the crypto sector, aligning enforcement tools more closely with those used in traditional financial markets.
Authorities say the goal is not only punishment, but deterrence, sending a clear signal that market manipulation in virtual assets will be met with swift and decisive action.