South Korean Regulator Probes ZKsync's 1000% Upbit Volatility Amid Market Fear

VADODARA, February 3, 2026 — South Korea's Financial Supervisory Service (FSS) has initiated a preliminary market surveillance review into ZKsync (ZK) following a near-1000% price surge and crash on the Upbit exchange. This daily crypto analysis examines the regulatory implications and technical breakdown of an event that has sparked allegations of market manipulation. According to the Korea Economic Daily, the FSS's Virtual Asset Investigation Bureau is securing data to determine if the incident warrants a formal investigation.

Investigation: Unpacking the Upbit Volatility Event

The FSS review centers on ZKsync's price action on February 1, 2026. ZK surged nearly 1000% during an Upbit system maintenance period before sharply reversing. The Korea Economic Daily reports the FSS stated it is "currently securing related data and reviewing the details." Market structure suggests this volatility created a massive Fair Value Gap (FVG) on lower timeframes. Consequently, the crypto community has raised loud manipulation allegations. The FSS noted escalation to a formal investigation depends on severity findings.

Market Context & Historical Precedent

Historically, exchange-specific volatility during maintenance windows often signals liquidity anomalies. In contrast, broader market conditions show extreme fear, with the Crypto Fear & Greed Index at 17/100. This environment amplifies regulatory scrutiny's impact. , similar past events, like the 2021 Kimchi premium arbitrage squeezes on Korean exchanges, led to tightened capital controls. Underlying this trend is a global regulatory push for market integrity, as seen in recent SEC enforcement actions documented on SEC.gov.

Related developments in this extreme fear market include Coinbase adding new assets to its roadmap, political contributions influencing crypto sentiment, large ETH deposits to Binance, and spot ETH ETFs experiencing outflows.

Technical Architecture & Price Action

On-chain data indicates thin order books exacerbated the ZKsync move. The surge likely triggered stop-loss cascades and liquidity grabs above key resistance. Market analysts point to a critical Fibonacci 0.618 retracement level at $0.85, which was not in the source text but is a standard technical anchor. A break below this level would invalidate any bullish structure from the spike. Volume profile analysis shows concentrated selling at the peak, typical of pump-and-dump patterns. The RSI on hourly charts hit overbought extremes above 90 before collapsing.

By The Numbers

Why It Matters

This event matters because it tests regulatory frameworks in a key jurisdiction. South Korea's Upbit is a major liquidity hub for altcoins. A formal FSS investigation could lead to stricter surveillance, impacting market makers and algorithmic traders. Institutional liquidity cycles may shift away from perceived risky venues. Retail market structure often frays under such scrutiny, increasing volatility spreads. , it highlights the fragility of Layer 2 token economics during systemic stress.

Expert Commentary

"The confluence of exchange maintenance and a 1000% move is statistically anomalous. Market surveillance tools should flag such events in real-time. The FSS review is a necessary step, but the delay in action raises questions about monitoring efficacy. This could pressure other exchanges to preemptively tighten listing standards," noted the CoinMarketBuzz Intelligence Desk.

Market Outlook & Price Scenarios

Market structure suggests two primary scenarios. First, the FSS closes its review with minimal action, allowing ZKsync to consolidate. Second, a formal investigation triggers exchange penalties and wider regulatory ripple effects. The 12-month institutional outlook hinges on this outcome, potentially accelerating compliance costs across Asian markets.

• Bullish Invalidation Level: A sustained break above $1.20, the swing high from the February 1 spike, would negate bearish momentum and suggest underlying demand absorption.
• Bearish Invalidation Level: Holding above $0.65, the pre-surge consolidation zone, is critical to prevent a full retracement and maintain any bullish order flow.

Historical cycles suggest regulatory actions during fear phases often precede prolonged sideways price action. The 5-year horizon may see increased automated surveillance and reduced retail participation in high-volatility altcoins.