Tax evaders in the city of Seoul held Bitcoin, Ether, and other crypto assets on three different exchanges. The tax authorities of the South Korean capital are still trying to identify another 890 tax evaders.
In recent days, the tax collection department of Seoul, the capital of South Korea, seized cryptocurrencies. They seized Bitcoin and other cryptocurrencies from 676 people, out of a total of 1,566 that they are investigating for tax evasion.
Local media reported that the authorities raised USD 22 million, distributed between three Korean exchanges, in the operation.
The crypto asset that tax evaders preferred was Bitcoin, which accounted for 19% of what was seized. Other cryptocurrencies included DragonVein and Ripple with 16%, Ethereum Ether with 10%, and Stellar with 9%, among others.
Since authorities have not yet identified 890 people, they are still working on the investigation. Any exchange that has KYC (know-your-customer) processes has the identity of its users, which they must give to the South Korean State.
The confiscation of the coins was only possible because the exchanges had the private keys in their possession. It would have been more difficult for the authorities to access the cryptocurrencies if users had withdrawn them to personal wallets.
Evaders Hope that the Price of Cryptocurrencies Will Rise
The Seoul government said in a statement that many taxpayers promised to “pay their taxes.” They are requesting the authorities not to sell their cryptocurrencies in the hope of being able to recover them.
Defaulting citizens hope that the value of their cryptocurrencies in the market will increase even more. With the profits that they make, they would pay the taxes that they owe and release the amount that the tax-collecting agency seized from them.
In the early days of April, Bitcoin was trading at around USD 58,000 on a global scale. However, the pioneering cryptocurrency was worth USD 66,000 in South Korea.
The prices of Bitcoin and other cryptocurrencies in the markets of the Asian nation are not the same as in other parts of the world. This difference in the prices is called the Kimchi Premium.
There Will Be More Taxes on Earnings with Digital Assets by 2022
According to the South Korean English-language daily Korea Herald, the South Korean Ministry of Economy and Finance issued a message in February. They said that those who earn more than USD 2,260 in the cryptocurrency market will have to pay a 20% tax from next year.
Likewise, they noted that those who receive inheritances and donations of cryptocurrencies must declare those holdings.
South Korea Is Against the Privacy Cryptocurrencies
Although the government of South Korea accepts the use of cryptocurrencies, they consider that it is necessary to control them.
In late 2021, the South Korean Financial Services Commission (FSC) decided to ban privacy-focused cryptocurrencies. They considered at that time that they pose a high risk of money laundering. That situation seriously affected users of altcoins Zcash, Monero, and Dash.
South Korea is not the only country that shows intolerance towards cryptocurrencies that ensure the privacy of users. The US government also signed a contract with the Internal Revenue Service (IRS) to track Monero. Furthermore, they seem to have started a silent war against the most private cryptocurrencies in the ecosystem.
By Alexander Salazar