Officials in the South Korean province of Gyeonggi have carried out one of the largest tax seizures in the country. The months-long investigation led to the confiscation of $47 million in , , and other cryptocurrencies, according to the Financial Times. Officials have called the event the largest “cryptocurrency seizure for back taxes in Korean history.”
Gyeonggi is the most populated province in South Korea and includes the country’s capital Seoul.
Officials seized funds from 12,000 tax dodgers by connecting their activity on cryptocurrency exchanges with their phone numbers. Investigators had to parse through this data manually because many exchanges did not collect formal identification of account holders. It is unclear which exchanges were included in the investigation.
South Korea’s regulatory crackdown
Exchanges’ lack of formal KYC identification has been one of the key drivers behind South Korea’s latest regulatory crackdown.
In March 2020, the National Assembly of South Korea passed a law demanding local exchanges to comply with anti-money laundering and terrorist financing guidelines from the Financial Action Task Force (FATF). Crypto businesses, notably exchanges, must also earn approval from the Financial Services Commission (FSC) and the Korea Internet and Security Agency before September 24, 2021.
This law includes new requirements for identifying users as well as clarity on which assets can be listed. If a project’s coin has low volume, inactive development, or is missing a clear channel of communication with its team, then it is subject to delisting.
Upbit, one of the “big four” crypto exchanges in South Korea, has already begun delisting several coins. The platform was also one of the first to earn a regulatory license to continue operating in South Korea.
As for the smaller exchanges, compliance has been difficult. This is because platforms must partner with a bank to earn their license. Banks have, however, been reluctant to associate with cryptocurrency exchanges, creating what one exchange operator has called an “existential crisis.”
News Source from Decrypt.co