South Korea Launches Probe into ZKsync’s 970% Upbit Price Spike

• ZKsync surged nearly 1,000% on Upbit during a system maintenance period on Feb. 1.
• South Korea’s Financial Supervisory Service launched a preliminary investigation.
• Authorities suspect coordinated trading that exploited low market liquidity.

South Korean regulators have opened a probe into a sharp ZKsync price surge on Upbit. The token climbed nearly 970% during a brief maintenance window on Feb. 1 on the country’s dominant exchange. Following this surge, the Financial Supervisory Service is examining whether coordinated trading caused the price swing.

Sudden Price Spike During Maintenance

ZKsync traded near $0.023 early Sunday morning, South Korean time, before Upbit began scheduled system maintenance. At about 11:30 a.m., shortly before the maintenance window started, the token’s price jumped sharply to around $0.24. 

By roughly 6:30 p.m., when normal trading conditions resumed, the price had fallen back close to its earlier level. The price surge points to almost 1,000% in a short span, followed by a rapid reversal.

Trading Volume Raises Red Flags

Trading data from Upbit showed ZKsync’s volume increased by more than 4,000% on Feb. 1. The surge stood in contrast to activity on global exchanges, where price and volume changes were far smaller.

On Coinbase, trading volume rose about 150%, while the token’s price gained less than 40%. Binance and Bybit reported similar patterns, with price increases below 55% and moderate volume growth. The gap between Upbit and other platforms raised concerns among regulators and market observers.

CoinGecko data shows that nearly 40% of all ZKsync trades were conducted on Upbit following the spike, despite the token typically seeing limited demand in South Korea. At the time of reporting, ZKsync accounted for less than 2% of Upbit’s total 24-hour trading volume.

Regulators Suspect Coordinated Trading

The Financial Security Service’s Virtual Asset Investigation Bureau acknowledged that ZKsync’s price moved sharply in a short time. The agency said it is examining the situation and may escalate it to a formal investigation depending on how serious the case turns out to be.

Legal experts told local media that traders may have coordinated buy orders ahead of the maintenance window to create artificial demand. 

Blockchain analysis reportedly identified about 15 wallet addresses that had been inactive before purchasing more than 4.2 million ZKsync tokens in the 30 minutes leading up to the outage.

Once the price peaked, the same wallets sold large amounts of tokens, generating estimated profits of about $18.7 million, according to the analysis.

Legal Consequences Under New Crypto Law

Jin Hyeon-su, a managing partner at law firm Decent Law, said the trading behavior appears to meet the legal definition of price manipulation and collusive trading under South Korea’s Virtual Asset User Protection Act.

The law, which took effect in 2024, allows courts to impose prison sentences of more than one year for market manipulation. It also permits fines of up to five times the profits earned from illegal activity. Additional penalties may apply if authorities determine that other investors suffered financial losses.

Part of a Broader Crackdown

The ZKsync probe comes as South Korea tightens oversight of digital asset markets. Earlier this month, a Seoul court sentenced the chief executive of a crypto management firm to three years in prison for manipulating token prices on the Bithumb exchange in 2024.

The Financial Supervisory Service has also announced plans to deploy artificial intelligence tools to monitor trading activity and detect abnormal patterns in real time.

Officials said the current review of ZKsync trading on Upbit could expand into a formal investigation depending on the findings, signaling continued scrutiny of altcoin trading during periods of low liquidity.

Notably, this is not the first time Upbit has come under regulatory scrutiny.  The exchange, operated by Dunamu Inc., faced a fraud probe in 2018. The ZKsync incident, meanwhile, has renewed concerns over exchange transparency during maintenance periods.

Globally, in the U.S., the SEC has brought more than 24 manipulation cases since 2023, while Europe enforces rules under MiCA. The probe may raise risk caution for Korean-listed tokens and increase compliance checks at exchanges.

Related: ZKP Token Jumps After Upbit Announces zkPass Support