Korean Regulator Rolls Out AI-Powered Crypto Market Surveillance System
The Financial Supervisory Service (FSS) of South Korea has developed an AI-based digital-asset market surveillance system to detect and analyze unfair trading in real-time. The new system uses generative AI, machine learning, and on-chain tracking to identify ultra-short-term pump-and-dump patterns, including the 'racehorse' and 'pen' types.
The FSS says the system will strengthen user protection and efforts to establish a sound market order by advancing AI tools. It will screen for tokens showing abnormal price moves over short periods using real-time data from exchanges and apply Benford's law alongside machine learning to detect fabricated trades that artificially inflate volume.
The agency is also using AI to analyze illegal front-running conducted through online chat rooms, as well as videos containing false information and online posts that encourage unfair trading. The system evaluates risk by distinguishing whether content is intended to induce investor trading or simply reflect casual conversation.