Prosecutors Raid Bithumb in Market Manipulation Probe

On November 1, prosecutors conducted a raid on Bithumb, one of South Korea's largest virtual asset exchanges, in connection with allegations of unfair trading practices involving the cryptocurrency Avail. This action follows an investigation by financial authorities into suspected price manipulation during Avail's listing on the platform.

In July, Avail's price experienced a dramatic surge, skyrocketing more than 15 times from 236 won to 3,500 won within just 15 minutes of being listed on Bithumb. However, this peak was short-lived, as the price plummeted to 284 won the following day. Notably, when Avail's price peaked on Bithumb, it was only 210 won on other exchanges, raising suspicions of market manipulation.

At the time, Bithumb asserted that their 24-hour monitoring system was operational and detected "no abnormalities" during the price surge. Despite these claims, the Financial Supervisory Service (FSS) launched an investigation into the matter, conducting an on-site inspection of Bithumb in September.

The investigation revealed that the suspect employed a typical price manipulation strategy. Large buy orders were submitted at high prices with the intention of selling coins received from an overseas virtual asset issuing foundation at inflated prices on a domestic exchange. The suspect used an API to place fake buy orders repeatedly, artificially altering the price and trading volume. This misled general users into believing there was a significant influx of buy orders for Avail. The illicit gains from this manipulation are estimated to be in the tens of billions of won.

Following the FSS's findings, financial authorities completed their investigation and notified prosecutors as an emergency measure. This led to the raid on Bithumb, as prosecutors sought to gather further evidence and hold those responsible accountable.

A Bithumb representative commented on the raid, stating, "It is difficult to provide a response at this time, and it is even harder to confirm details related to the authorities."