South Korean authorities seized KRW53 billion ($47 million) from digital currency holders accused of tax evasion. In Gyeonggi, one of the biggest provinces in the country, the confiscation was made one of the most significant by tax authorities. Digital currency exchanges have been partnered by the government, providing their client information.
South Korea was tough concerning the taxation of digital currency, but investors ignored the warnings, as stated in a Financial Times story. In Gyeonggi, the province which oversaw Seoul and is home to 14 million people, the authorities seized BTC, Ethereum, and other digital currency. The article reports 12,000 people who were all accused of evading the taxation responsibilities were the victims of the seizure.
For several months, Gyeonggi authorities have investigated tax evaders. They suspect that 140,000 people have evaded taxes.
Kim Ji-ye, General Director of the Fairness Bureau Province of Gyeonggi said,
“We will do our utmost to protect law-abiding taxpayers and fulfill our fair taxation mandate by probing and tracing assets that tax dodgers may be concealing amid the recent cryptocurrency trading fervor.”
According to police, this is the greatest digital money confiscation for back taxes in South Korean history. They claim that local digital currency exchanges are being used to hide assets since they do not gather all of their clients’ identity information.
In the Korean digital currency market, this has become one of the most contentious topics. New legislation enacted this year compels exchanges to gather all users’ personal identification information, register with financial authorities, and obtain the requisite licenses. They must also have a bank relationship, which is one of the most challenging conditions.
South Korean commercial banks have been hesitant to partner with digital currency exchanges. Only the Big Four—Korbit, Coinone, Upbit, and Bithumb—have bank agreements. Even these giants’ banking partners are reportedly reconsidering their relationship, according to sources. To align itself with regulators and its banking partner K Bank, Upbit recently delisted 24 tokens.
The fact that the top regulator has threatened to shut down all exchanges, including the Big Four, hasn’t helped matters. According to Eun Sung-soo, the Financial Services Commission (FSC), which regulates the industry, the applications for licenses required to operate in South Korea have yet to be received.
“There are an estimated 200 cryptocurrency exchanges in the country. But if the current situation continues, then all of them could be shut down.