South Korean regulators have kick-started investigations into the manipulation of ZKsync after the token surged by 970% on the Upbit exchange. The surge sparked concerns over possible price manipulation, triggering an investigation by South Korean financial regulators.
According to their statement, the regulators believe the spike was a result of suspicious trading activity. South Korean financial regulators have opened investigations into the Upbit exchange after the ZKsync token surged in three hours before dropping back to its initial price. Regulators believe the spike was the result of price manipulation and said they are investigating the matter.
South Korean regulators kickstart investigation as ZKsync token surges by 970%
ZKsync was trading at $0.023 on Sunday morning, South Korean time, as the Upbit exchange prepared for scheduled system maintenance. At 11:30 AM, just before maintenance began, the price rose significantly to $0.24 over the next three hours, only to drop back to around $0.023 by 6:30 PM the same day, after the maintenance period ended.
A spokesperson for the Financial Security Service’s Virtual Asset Investigation Bureau said that the financial watchdog had noticed the peculiar price behavior ZKsync experienced that day and was looking into the matter, after which things “may quickly transition to a formal investigation after determining the severity of the case.”
Experts told a local South Korean newspaper that traders on the exchange set up a “buy wall” just before the maintenance period began, as part of a coordinated effort to artificially spike demand for the coin and push its price higher. According to data from the Upbit exchange, trading volumes in ZKsync surged by over 4,200% at the time of the incident.
In comparison, the token’s trading volume on Coinbase rose by a more modest 150% on the same day, while prices increased by just under 40%. The volume on Binance rose by 180%, while the crypto asset’s price moved by just 38-42%. According to legal experts, the action falls under the Virtual Asset User Protection Act, which came into effect in July 2024.
Jin Hyeon-su, managing partner at Decent Law Firm, said that “a large number of buy orders being concentrated in a short period of time, followed by a release of the volume afterwards” likely results in “price manipulation, collusive trading, and unfair trading.” The action is illegal under South Korean regulations, and perpetrators face over a year in prison and fines totaling up to five times the realized profits if found guilty. In addition, fines are also issued in applicable cases.
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