Key Points
- South Korean government has seized $138,000 in cryptocurrency from tax evaders.
- The confiscated amount is six times greater than the previous year’s seizure.
The South Korean government announced on June 18th that it had identified and seized the cryptocurrency holdings of tax evaders. This was achieved by examining the records of five South Korean cryptocurrency exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax.
Between March and April, tax authorities scrutinized the data of 3,026 individuals who owed more than 5 million won (approximately $3,619) in local taxes. They were able to link 31 of these individuals to crypto wallets on four of the exchanges, with Gopax being the exception.
Identification and Seizure
South Korean law requires all cryptocurrency exchanges operating in the country to connect customers’ wallets to their real names and social security number-verified bank accounts. This regulation enabled the province’s tax officials to easily identify the tax defaulters who held cryptocurrency assets.
The amount of cryptocurrency confiscated is six times the sum seized in a similar operation last year. In that instance, Jeonbuk Province confiscated about $22,500 worth of cryptocurrency from 12 individuals who owed more than $3,619 in local taxes.
Hwang Cheol-ho, the head of the Jeonbuk Self-Governing Province Autonomous Administrative Unit, stated that the authorities are becoming more adept at identifying the methods tax evaders use to conceal their digital assets. He affirmed their commitment to continue collecting funds in this manner.
The province issued an ultimatum to the 31 tax evaders, instructing them to settle their outstanding tax bills or risk having their assets liquidated and confiscated. Following this warning, one individual chose to immediately pay their $1,839 tax bill to avoid losing their cryptocurrency assets.
South Korea’s Fight Against Crypto-Enabled Tax Evasion
These actions are part of South Korea’s broader efforts to combat tax evasion facilitated by cryptocurrency. In March, tax authorities in Hwaseong managed to confiscate the cryptocurrency assets of a tax offender valued at over $768,500, with $567,000 of the total amount seized from one person.
Additionally, in February, the Gyeonggi province reported that it had collected $4.6 million in unpaid taxes from cryptocurrency holdings using an electronic system capable of tracking virtual assets. These measures are anticipated to decrease crypto-related tax offenses and reduce the rate at which users hide their cryptocurrency earnings in the country.
The government had previously warned cryptocurrency holders to declare their overseas assets or face prosecution. According to the Income Tax Act, residents with more than 500 million won in their overseas accounts at the end of any month must declare it to the authority by June 30 each year.
