As published on cryptonews.com, Thursday 22 September, 2022.
South Korean tax authorities have seized over $186 million in crypto from tax-evading individuals since 2021.
According to data released by the Ministry of Strategy and Finance, the Ministry of Public Administration and Security, the National Tax Service, and 17 cities and provinces nationwide, almost $125 million of the total was seized from individuals who failed to pay national levies – such as income tax.
Yonhap reported that the remainder was seized from individuals who defaulted on local tax payments or was confiscated in foreclosures – instances where, for instance, individuals failed to honor certain loan repayments.
The data also showed that the vast majority (30%) of all the cryptoassets seized by tax authorities came from individuals based in Seoul and the surrounding area (Gyeonggi Province).
The data was made public after a request for information made by Kim Sang-hoon, an MP representing the incumbent People’s Power Party.
The data also showed that in one instance, an individual based in Seoul saw almost $9 million worth of coins confiscated from their wallets – including some $2.3 million worth of bitcoin (BTC) and over $1.3 million worth of XRP.
The authorities revealed that in many cases, they had returned the coins to their owners after the individuals in question had paid their tax bills in fiat. In the case of those who failed to pay, however, the tax body liquidated coins “at the market rate.”
The massive spike in crypto confiscations from tax evaders has come as a result of the government’s move in 2020 to effectively ban its citizens from trading crypto anonymously on domestic platforms. All crypto exchanges in South Korea must partner with domestic banks in order to receive operating licenses. The banks must, in turn, provide real name- and social security number-verified trading accounts linked to individual crypto wallets.
As such, the government has created a paper trail that turns crypto holdings into low-hanging fruit for tax investigators – who, along with the police, have the power to seize, freeze, or liquidate coins in cases where tax evasion or serious crime have been identified.
Tax authorities began their preliminary investigations into the seizure of crypto from tax evaders back in 2020, but only began to seize coins in earnest last year.