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South Korea tax agency seizes nearly $200M in digital assets from tax offenders

Stack of coins money with South Korea flag

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The South Korean government has stepped up efforts to crack down on digital asset tax crime in the country by seizing their holdings. Local news outlet mk.co.kr reported that the amounts seized from the government were a whopping KRW 260 billion ($182.3 million).

The seizures continued for two years, beginning when South Korean authorities passed a law authorizing the confiscation of tax evaders’ assets. The country’s Ministry of Strategy and Finance, Ministry of Administration and Security and the Tax Administration cooperated in the seizure covering 17 provinces.

A total of KRW 126.3 billion ($88.5 million) was confiscated for non-payment of national tax. In comparison, law enforcement seized KRW 83.4 million ($58,500) for failing to comply with local tax requirements in their jurisdictions. Seoul, Incheon and Gyeonggi-do have the highest number of tax crimes and accounted for 30 percent of the total amount seized, with Gyeonggi-do recording more than 53 million South Korean won ($37,176) seized.

A resident of Seoul was responsible for the largest single seizure, as the report stated that a whopping KRW 12.49 billion ($8.7 million) was taken from him. Authorities confirmed that he owed KRW 1.43 billion ($1.003 million) in local taxes and, as required by law, seized his holdings, which included up to 20 different virtual assets, including BTC.

According to tax regulations, the authorities have the right to sell the seized digital assets at the fair market price in order to collect tax arrears. However, some individuals have cited the law as bordering on draconian.

“The law and policy guarantee a stable investment environment for virtual currency, but the taxation paid by the citizens must be subject to fair taxation principles,” said President of the Republic Kim Sang-hoon.

New system and new laws

In March, South Korea elected a pro-virtual currency president after a heated presidential race. Yoon Suk-Yeol, South Korea’s new president, promised to “reform regulations that are far from reality and unreasonable” to promote the growth of the country’s digital asset ecosystem.

Yoon’s administration has postponed the 20% tax on virtual currency earnings above $1,900, or KRW 2.5 million, until 2025. The implementation of the law is changing due to “stagnant” market conditions and the need to issue new rules to protect investors.

Despite Yoon’s best efforts to improve the sector, Terra’s collapse in May has pulled the ecosystem back two steps as regulators shine a spotlight on operators for their role in the incident.

See: BSV Global Blockchain Convention Panel, Law and Order: Blockchain and Digital Asset Regulatory Compliance

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