Authorities in the South Korean province of Gyeonggi have conducted the largest tax seizures ever, seizing $47 million in Bitcoin (cryptocurrency, based on the proof-of-work blockchain. Bitcoin was created in 2009 by a mysterious creator, Satoshi Nako…”>BTC) and Ethereum (ETH).
According to the coverage reported by the Financial Times, the seizure involved about 12,000 tax evaders. The authority has called the action the largest “cryptocurrency seizure for back taxes in Korean history.”
Those “tax dodgers” committed the crime by connecting their trading or investment activities on trading platforms operating in the country with their phone numbers. The process, though rigorous, had to be done manually as crypto exchanges were unable to fully provide the Know-Your-Customer (KYC) details of the defaulting taxpayers. In addition, the FT report was unclear which digital currency trading platform was involved in the investigation.
South Korea has a robust cryptocurrency trading engagement amongst its citizens, and the country has been making moves to implement accomodating regulations. One of these is the law passed by the Korean National Assembly in March 2020. This law mandates cryptocurrency exchanges to take down customer’s details through KYC and obtain licenses to operate from banks.
While big exchanges such as UpBit have been able to comply, other smaller trading platforms have had their struggles in complying, a situation that was compounded by financial institutions dissociating from crypto exchanges. Besides these, South Korea has long been mulling enforcing a 20% capital gains tax on cryptocurrency is a digital asset containing cryptographic protocols that make transactions secure and immutable. Crypto…”>cryptocurrencies, all of which will be made easier with compliant crypto exchanges.
South Korea is one of the more receptive countries to blockchain and cryptocurrency-related innovations. While crypto has thrived in the country in the past decade, the government is taking bold steps to develop its own Central Bank Digital Currency, the Digital Won. Despite its soft stance, however, the nation has zero-tolerance for fraud amongst crypto entities, as showcased in the ongoing raid of Bithumb exchange amidst a broad fraud investigation.
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