FSS Introduces Generative AI for Real-time Monitoring of Unfair Crypto Trading

The Financial Supervisory Service (FSS) has introduced a generative artificial intelligence (AI) system it developed in-house to monitor the cryptocurrency market, where unfair trading practices such as market manipulation are frequent. This system is designed to monitor thousands of coin markets operating 24 hours a day; the AI automatically analyzes instances only when prices fluctuate sharply to filter out stocks requiring investigation, and it is specialized in detecting intended trading patterns (pump-and-dump) or fake transactions in real time.

Generative AI collects exchange announcements and news for specific coins to analyze the causes of sharp price and trading volume fluctuations. It checks for legitimate reasons for price increases, and for coins showing unsubstantiated surges, it requests trading data from exchanges to review the necessity of an investigation.

The analysis of online information has also been automated. The AI detects illegal front-running through leading investment groups (chat rooms), videos containing false information, and posts instigating unfair trading. It converts captions and audio from posts and videos into text to analyze the circumstances of illegal acts and the level of risk.

For detected suspicious transactions, the AI assists with everything from in-depth trading analysis to report writing. It analyzes metrics such as the order book participation rate, trading gains, and price influence rate per account to screen for suspicious accounts and expand the detection of linked accounts, then automatically generates a review report based on indicators of suspicion.

The FSS developed a function to automatically extract periods suspected of market manipulation in January and a linked account detection function in April. It plans to add support for tracking fund flows and on-chain tracking in the future.