South Korea’s Financial Services Commission (FSC) says it has investigated more than 40 cases of alleged unfair conduct in the crypto market over the past two years, ranging from market manipulation to fraudulent trading activity. The regulator also claims it has identified 25 suspects connected to those matters after the Virtual Asset User Protection Act took effect in July 2024.

FSC Chair Lee Eog-won shared the figures in a post on X, noting that 30 of the cases have been reported to or referred to investigative authorities. He said the average unlawful gains in the matters reviewed were roughly 1.4 billion Korean won (about $940,000).

Key takeaways

• The FSC reports probing 40+ unfair trading cases over two years, including manipulation and fraud.
• After the Virtual Asset User Protection Act began in July 2024, Lee said authorities identified 25 suspects tied to 30 reported or referred cases.
• Lee estimated average unlawful gains of about 1.4 billion won per case.
• The law strengthens the FSC’s ability to supervise and inspect crypto service providers (VASPs), with additional focus on high-risk trading behavior.
• The regulator says it plans to expand market surveillance using AI-assisted monitoring and targeted responses.

Why the numbers matter for South Korean crypto markets

The FSC’s update is significant because it frames crypto enforcement not as isolated incidents, but as an ongoing investigative pipeline. By connecting the latest suspect and case counts to the start of the Virtual Asset User Protection Act, the regulator is effectively signaling that the post-legislation framework is now producing measurable enforcement outcomes.

For traders and users, the practical implication is that conduct previously handled under looser or less specific oversight is increasingly being treated as compliance and supervision issues—especially for activity that regulators typically view as harmful to market integrity, such as wash trading and insider-related behavior.

What the Virtual Asset User Protection Act requires from VASPs

At the core of the regulator’s message is how the July 2024 law changes the relationship between crypto platforms and investors. According to Cointelegraph reporting, the Virtual Asset User Protection Act is designed to protect users who buy and store crypto assets through virtual asset service providers (VASPs).

Under the framework described by the FSC, VASPs are required to separate client deposits and virtual assets from the company’s own holdings. Client deposits are held in banks, creating a structural distinction intended to reduce the risk that user funds could be mixed with corporate assets.

The statute also specifically targets market integrity issues, aiming to deter and address illicit practices such as insider trading, wash trading, and market manipulation. This, in turn, broadens the FSC’s oversight remit and gives the commission more authority to supervise and inspect VASPs.

Focus on market surveillance and enforcement capacity

In the same X post, Lee said the FSC will keep enhancing its market surveillance and investigation systems, explicitly citing the use of AI to support monitoring. He also indicated that authorities will “proactively respond to high-risk areas,” a phrase that suggests the regulator is increasingly focusing resources where it expects the most misconduct risk rather than reacting only after damage has occurred.

This matters because enforcement outcomes often depend not just on legal authority but on the ability to detect patterns in trading behavior at scale. The FSC’s emphasis on AI-based monitoring aligns with the kinds of tactics it named—wash trading and manipulation are frequently identifiable through transaction and order-flow patterns that can be monitored continuously.

Earlier coverage by Cointelegraph has also noted how South Korea is moving to bring digital assets more firmly within state oversight structures, including steps that extend beyond user-protection provisions. The latest enforcement update fits that broader direction by showing how supervision and investigations are being operationalized.

What investors should watch next

Going forward, the most important signal for market participants is whether the FSC’s investigation pipeline translates into sustained compliance pressure on VASPs—especially around surveillance-heavy practices like wash trading and manipulation. Readers should watch for additional enforcement actions and any expansion of AI-assisted monitoring capabilities, since that is likely to determine how quickly suspicious activity is detected and how consistently it leads to referrals and sanctions.

Momentum behind the US CLARITY Act appears to be fading as political and ethics concerns collide with a potential Senate push. Polymarket places the odds of the bill passing this year at about 40%, citing objections from Democratic lawmakers and raising the possibility that the ethics controversy could derail broader bipartisan work.

Beyond Washington, crypto’s second quarter showed a split: mainstream trading activity continued to contract, while prediction markets hit record volumes. At the same time, France moved to block Polymarket, underscoring how regulation is shaping where and how prediction markets can operate.

Key takeaways

• Polymarket estimates roughly a 40% chance that the CLARITY Act clears the Senate this year.
• Senate Majority Leader John Thune said a vote will be held before Aug. 10, but ethics-related disputes are complicating Democratic support.
• CoinGecko’s Crypto Industry Report shows spot trading on the top 10 centralized exchanges fell from $2.7T in Q1 to $1.95T in Q2.
• Prediction markets bucked the trend, reaching $113.8B in notional volume in Q2, while France’s gambling regulator ordered Polymarket access blocked.
• Tokenized stocks recorded a new high at $2.3B in global market cap, led by Ethereum (34%) and BNB Chain (30%).

CLARITY Act vote faces an ethics-driven test

Several Democrats have signaled resistance to the CLARITY Act, according to Cointelegraph’s earlier reporting on Senate opposition from lawmakers including Chris Murphy, Jeff Merkley and Chris Van Hollen (see linked coverage). The concern centers on how the bill intersects with the politics of crypto advocacy and potential conflicts of interest.

Cointelegraph reports that Senate Majority Leader John Thune indicated a crucial vote could happen as early as this week and would definitely take place before Aug. 10. But the political calendar alone may not be enough: Democrat Senator Elizabeth Warren is attempting to “spoil the vote” by spotlighting alleged links between President Donald Trump and crypto profits, Cointelegraph says.

Warren’s push builds on claims that Trump earned more than $1 billion from crypto last year, based on a 2025 disclosure. Cointelegraph also notes that this is why Senate Democrats may be unwilling to support the bill unless it includes language barring elected officials from promoting or issuing cryptocurrency.

“Ethics is the big elephant in the room.”

The quote is attributed to Summer Mersinger, CEO of the Blockchain Association and a former commissioner at the US Commodity Futures Trading Commission, in Cointelegraph’s linked coverage (see linked coverage).

“For my members and what we are advocating for on the Hill… look, whatever you decide on ethics, that’s really not our concern. That is politics. That’s Congress. That’s elected officials. But please don’t let it kill all the hard work that we put in the rest of the bill.”

For investors and builders, the practical risk is straightforward: even if the CLARITY Act advances on substantive market-structure provisions, passage could hinge on whether lawmakers accept ethics guardrails that satisfy Democratic conditions. Readers should watch whether negotiators offer a specific ban on officials’ crypto activity—or whether the bill’s schedule slips despite Thune’s stated timeline.

Q2 revealed a divergence: spot weakness, prediction market strength

Crypto markets were weak in Q2 overall, but prediction markets stood out as an exception. CoinGecko’s Crypto Industry Report, cited by Cointelegraph, shows spot trading volume across the top 10 centralized exchanges dropped from $2.7 trillion in Q1 to $1.95 trillion in Q2.

Derivatives also softened. CoinGecko data cited in the report indicates CEX perps volume declined 10% to $12.7 trillion, while the stablecoin market fell 1.6% to $305.1 billion.

Against that backdrop, prediction markets recorded their strongest quarter on record, reaching $113.8 billion in notional volume. Cointelegraph links that performance to Polymarket’s specific categories as well: the platform’s World Cup winner market has attracted more than $3.3 billion in trading volume, and contracts tied to the 2028 US presidential election rank among the platform’s largest markets, according to Polymarketscan data (polymarketscan).

France blocks Polymarket as regulation tightens

While prediction markets appear to be drawing record engagement, regulatory actions are limiting access. Cointelegraph reports that France’s National Gambling Authority ordered internet service providers to block access to Polymarket after concluding that prediction markets may fall under illegal gambling.

The report adds that Polymarket is blocked in 33 countries, while users can still often access via tools such as VPNs—an important reminder that enforcement patterns can vary and that compliance risk can shift as regulators act.

For market participants, the implication is that prediction-market growth may be constrained not only by liquidity and user demand, but by whether regulators treat the platform as a sportsbook, a financial product, or something in between. Upcoming legal clarity in France and elsewhere will likely influence where future liquidity concentrates.

Tokenized stocks reach $2.3B as traditional finance experiments continue

Tokenized equities also chalked up a milestone. Cointelegraph cites Token Terminal data saying global market capitalization of tokenized stocks rose to a record $2.3 billion on Wednesday.

Ethereum led with a 34% share, followed by BNB Chain at 30% and Solana at 23%, according to the same Token Terminal dataset shared in a post on X by Token Terminal (see post).

Growth was driven by issuer and exchange-specific activity. Cointelegraph points to Kraken exchange’s xStocks representing $507 million and Binance’s bStocks at $334 million, while Ondo Finance remained the largest tokenized stock issuer with $955 million in onchain equities, based on Token Terminal data (Token Terminal explorer).

The custody and infrastructure layer remains a key battleground for legitimacy and scaling. Cointelegraph notes that the Depository Trust & Clearing Corporation (DTCC), described as custodian of $114 trillion in assets, launched a trial of tokenized securities in partnership with more than 40 financial firms.

Separately, Cointelegraph mentions Robinhood Chain’s ambition to lead in tokenized stocks, while also noting that its volume to date has been driven largely by memecoins—an observation that highlights how tokenized equity momentum may still depend on user acquisition beyond the “equities” narrative itself.

Regulatory alignment on stablecoins, compliance clock still ticking

US and UK authorities are seeking alignment on parts of tokenized finance. Cointelegraph reports that the US Department of the Treasury and HM Treasury in the UK issued four joint recommendations on digital assets (see linked coverage).

The task force recommends that regulators consider a private-sector-led group to test cross-border use cases for tokenized assets, while also asking US financial agencies and the Bank of England to identify shared regulatory approaches for tokenized assets.

On stablecoins, the statement says they “should be fully backed, on at least a one-to-one basis, by high-quality, liquid assets,” aligning with the structure in US law.

However, Cointelegraph also reports that, shortly afterward, it emerged that US regulatory agencies missed a Saturday rulemaking deadline for the GENIUS stablecoin act. Cointelegraph clarifies that missing a statutory deadline does not void the GENIUS Act, but could compress the time available for issuers to comply ahead of rules taking effect in January.

What to watch next

The next few weeks may determine whether the CLARITY Act can move past ethics-driven objections in the Senate, while the global pattern for prediction markets and tokenized assets will depend on how regulators translate policy into enforcement. Keep an eye on the CLARITY vote timetable, France’s follow-through on Polymarket restrictions, and how stablecoin compliance timelines evolve after the GENIUS rulemaking slip.

South Korea’s financial authorities investigated more than 40 cases of unfair trading, including market manipulation and fraudulent crypto trading, in the last two years. 

According to an X post by Financial Services Commission Chair Lee Eog-won, 30 of them reported or referred to investigative agencies, identifying 25 suspects since the Virtual Asset User Protection Act took effect in July 2024.

Lee said the average unlawful gains were around 1.4 billion Korean won ($940,000).

“Today marks the second anniversary of the enactment of the ‘Virtual Asset User Protection Act…’ It was a meaningful time that brought the virtual asset market, which was outside the institutional framework at the time, into the fold of the law and created an opportunity to establish a user protection system for virtual assets,” said Lee.

The Virtual Asset User Protection Act is designed to protect users who buy and store crypto assets with virtual asset service providers. 

VASPs are legally required to separate user deposits and virtual assets from their own corporate holdings, holding client deposits in banks. 

The legislation also targets illicit activities such as insider trading, wash trading and market manipulation, enhancing the Financial Services Commission (FSC) authority to supervise and inspect VASPs. 

“We will continue to enhance market surveillance investigation and monitoring systems based on AI, and proactively respond to high-risk areas,” Lee added.

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

CLARITY hinges on Trump’s ethics

Polymarket suggests the odds of the CLARITY Act passing this year are just 40%, after a raft of Democratic Senators, including Chris Murphy, Jeff Merkley and Chris Van Hollen, spoke out against the bill.

A crucial Senate vote could happen as early as this week, with Senate Majority Leader John Thune stating it will definitely be held before Aug. 10.

Democrat Senator Elizabeth Warren is trying to spoil the vote by highlighting how much money President Trump has extracted from the industry. She demanded Trump voluntarily release his crypto earnings for this year, after his 2025 disclosure, showed he earned more than a billion dollars from crypto last year. The controversy means that Senate Democrats are unlikely to support the bill without a provision banning elected officials promoting or issuing cryptocurrency.

Summer Mersinger, the CEO of the Blockchain Association and a former commissioner at the US Commodity Futures Trading Commission, said: “Ethics is the big elephant in the room.”

“For my members and what we are advocating for on the Hill… look, whatever you decide on ethics, that’s really not our concern. That is politics. That’s Congress. That’s elected officials. But please don’t let it kill all the hard work that we put in the rest of the bill.”

Source: Polymarket

Prediction markets see record Q2 volume, France blocks Polmarket

Crypto markets continued to flounder in the second quarter, with the notable exception of prediction markets.

Spot trading volume across the top 10 centralized exchanges (CEXs) fell from $2.7 trillion in the first quarter to just $1.95 trillion in the second, according to CoinGecko’s latest Crypto Industry Report.

CEX perps volume also declined 10% to $12.7 trillion, while the stablecoin market slipped 1.6% to $305.1 billion. In contrast, prediction markets recorded their strongest quarter on record with $113.8 billion in notional volume.

Polymarket’s World Cup winner market alone has attracted more than $3.3 billion in trading volume, while contracts tied to the 2028 US presidential election rank among the platform’s largest markets, according to Polymarketscan data.

Meanwhile, France’s National Gambling Authority has just ordered internet service providers to block access to Polymarket as it considers prediction markets to be illegal gambling.

Polymarket is blocked in 33 countries… unless you have a VPN of course.

Strategy became a symbol of the dot-com crash: Could history repeat?

Senate agrees SBF should serve his time as FTX distributes another $900M

The US Senate has adopted a resolution opposing executive clemency for former FTX CEO Sam Bankman-Fried.

The measure cannot block a presidential pardon but reflects bipartisan Senate opposition.

Bankman-Fried was sentenced to 25 years in federal prison in March 2024 after being convicted of fraud and conspiracy charges linked to FTX’s collapse in 2022.

Speculation about a possible presidential pardon grew after Bankman-Fried applied for clemency from Trump in June 2026.

On Friday, the FTX Recovery Trust said it would distribute about $900 million to creditors in the fifth round of repayments. The trust has now paid out about $10 billion since the company filed for bankruptcy.

Tokenized stocks hit record $2.3B

The global market capitalization of tokenized stocks rose to a record $2.3 billion on Wednesday, as more investors sought exposure to blockchain-based equity products.

The Ethereum network boasted the largest market share, at 34%, followed by BNB Chain with 30% and the Solana network with 23%, data aggregator Token Terminal shared in a Wednesday X post.

The largest increase came from Kraken exchange’s xStocks, which accounted for $507 million worth of tokenized stocks and Binance’s bStocks, with $334 million. Ondo Finance remained the largest tokenized stock issuer with $955 million in onchain equities, according to Token Terminal data.

The Depository Trust & Clearing Corporation, which is the custodian of $114 trillion in assets, last week launched a trial of tokenized securities in partnership with more than 40 financial firms.

Robinhood Chain also aims to become a leader in tokenized stocks, however its volume to date is largely driven by memecoins.

Is Robinhood Chain’s success bullish or bearish for ETH the asset?

US and UK to align stablecoin rules, but Genius Act rules are TBA

The US Department of the Treasury and HM Treasury in the UK have issued four joint recommendations on digital assets.

The task force recommended that authorities consider a private-sector-led group focused on “testing of cross-border use cases for tokenized assets” and that financial agencies in the US and the Bank of England identify shared approaches on the regulation of tokenized assets. 

The statement said that stablecoins “should be fully backed, on at least a one-to-one basis, by high-quality, liquid assets,” aligning with the US law.

Ironically, a few days later it emerged the US regulatory agencies had all missed Saturday’s rulemaking deadline for the GENIUS stablecoin act. Missing the statutory deadline does not invalidate the GENIUS Act, but will result in issuers having less time to comply before the rules go into effect in January.

Source: ZachXBT (but DYOR)

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $64,620, Ether (ETH) at $1,868 and XRP (XRP) is at $1.09. The total market cap is at $2.21 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin winners of the week are Pump.fun (PUMP) which gained 36%, Venice Token (VVV) on 10%, and Litecoin (LTC) which is up 7%.

The top three altcoin losers of the week are DeXe (DEXE) after it lost 27%, Lighter (LIT) which was down 17%, and Worldcoin (WRLD) which fell 14%.

Prediction of the Week

Bitcoin gets new $80K August target

Bitcoin (BTC) may hit up to $80,000 by August if it clears nearby resistance, a new prediction says. A macro tide could be the spark to ignite the next move higher.

Crypto trader and analyst Michaël van de Poppe said earlier this week that BTC/USD has successfully defended “crucial” support.

“It’s holding the crucial level at $61,000 and flipping important MAs for support, indicating that there’s more momentum on the horizon,” he wrote, referring to moving average trend lines. 

“I’m expecting to see a rally to $68,000 in the next 1-2 weeks, followed by a continuation towards $75,000-80,000 in August.”

Not everyone agreed with the analysis, including nichoxbt who thinks the price is heading back under $60,000.

Source: Nichoxbt

Top FUD of the Week

Consensys unknowingly outsourced developer work to North Korean

Blockchain company Consensys accidentally used a software developer linked to North Korea, who had access to some of its systems for a month.

First reported on Friday by Drop Site, Consensys earlier this year took on a software developer via a “reputable third party service provider” who was later discovered to have ties to the Democratic People’s Republic of Korea. 

The move caused the Metamask developer to temporarily suspend product releases, but said an investigation has “confirmed there was no misappropriation of assets or data, no malicious code deployed, and no impact to user safety and security.”

Kaspersky identifies malware framework targeting crypto investors

Cybersecurity company Kaspersky said a newly identified malware framework is targeting cryptocurrency investors.

Dubbed “OkoBot,” the malware initiates an infection chain that starts with social engineering tactics such as ClickFix, which tricks users into running malicious commands, or trojanized GitHub apps that deliver a backdoor to infected devices, the cybersecurity company wrote in a Wednesday report.

A separate malware campaign seeks to infiltrate the devices of Web3 developers via fake LinkedIn recruitment opportunities, according to SlowMist.

Attackers contact blockchain devs via LinkedIn, posing as recruiters. They then send fake GitHub repositories to victims, claiming they contain code that needs to be assessed before the interview, the security company said in a Saturday report.

Base’s social bet left it trailing in prediction markets and perps: Pollak

Base creator Jesse Pollak says he is stepping back from leading the Base App after admitting he made a “wrong bet” on social, leaving the chain to fall behind on prediction markets and perpetual futures. 

In a post to X on Wednesday, Pollak said he had bet that creator, content and messaging apps would drive adoption, but instead the market “disintegrated completely.” 

Pollak said he now realized financial applications are the way forward for the network, with a focus on trading, payments and AI agents. 

The Base App will now return to Coinbase, and will be overseen by crypto influencer and trader Jordan Fish, better known on X as “Cobie.”

Top Magazine Stories of the Week

Strategy became a symbol of the dot-com crash: Could history repeat?

MicroStrategy blew up during the dot-com era, before Michael Saylor transformed it into the world’s largest corporate Bitcoin holder. Did he learn his lesson?

Is Robinhood Chain’s success bullish or bearish for ETH the asset?

Surging volumes on Robinhood Chain could be very good for Ethereum, but only if the “ETH is money” crowd turn out to be right.

Gambling on random Pokémon cards: Onchain gagcha hits record high as crypto sinks

Users spent a record $324 million on onchain gacha in June, even as Bitcoin hit a 21-month low. The thrill of scoring a top Pokemon card from a random pack is becoming big business.