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South Korea’s top financial watchdog is stepping up oversight of crypto markets days after a local exchange mistakenly distributed billions of dollars worth of bitcoin to users.

The Financial Supervisory Service said Sunday it will launch planned investigations into “high-risk” practices that undermine market order, including large-scale price manipulation by so-called whales, trading schemes tied to suspended deposits and withdrawals, and coordinated pump tactics fueled by social media misinformation.

The watchdog also said it plans to build tools that automatically extract suspicious trading patterns by the second and minute, alongside text-analysis systems using artificial intelligence to flag potential market abuse.

The announcement follows a widely reported exchange error last week in which some users of Bithumb, among the country's biggest exchanges, were mistakenly credited with at least 2,000 bitcoin each instead of small promotional rewards, a blunder estimated at roughly $44 billion at the time.

BTC prices dropped 30% compared to the global average at the time, as some recipients tried to sell the assets. The exchange had restricted trading and withdrawals for the 695 affected customers within 35 minutes of the erroneous distribution on Friday.

Regulators said the incident exposed the “vulnerabilities and risks” of virtual assets and signaled they could conduct on-site inspections of exchanges if irregularities are found in internal control systems.

Beyond market manipulation, the FSS said it will introduce punitive fines for IT incidents across the financial sector and raise the security accountability of chief executives and chief information security officers, a shift that could have direct implications for crypto trading platforms.

The agency also confirmed it has set up a preparatory team for the Basic Digital Asset Act, which would expand Korea’s regulatory framework beyond the first phase of crypto rules.

The crackdown plan reflects a broader push by President Lee Jae-myung to stamp out what he has called “cruel financial practices,” with the FSS also outlining measures to strengthen enforcement against fraud and expand tools to combat voice phishing.