Will South Korea Punish Crypto Tax Evaders? Kim Nam-guk’s Trial Sets a Precedent
The recent eye-opening case came when Kim Nam-guk, a former lawmaker from the Democratic Party of Korea, was accused of hiding his cryptocurrency wealth. The prosecutor has required The Seoul Southern District Court sentenced Kim to six months in prison for deliberately hiding large amounts of cryptocurrency in an asset declaration to the National Assembly, which he was required by law to submit. The case demonstrates South Korea’s zero-tolerance attitude towards defaulters in cryptocurrency tax-related cases.
The case is sparking debate about the taxation of cryptocurrencies and how such cases are handled at a time when crypto assets are viewed as a safety net by many small-scale traders and investors.
How Kim hid his cryptocurrency?
According to prosecutors, Kim planned to hide his crypto assets from the National Assembly’s ethics committee, which scrutinizes members’ financial details. He moved most of his cryptocurrency holdings to regular bank accounts to make it appear as if he held no cryptocurrency. Additionally, he misreported his total assets by far less than he owned. This was done by converting some of his coin deposits into term bank deposits and reporting them as part of his total assets, while hiding the actual value of his cryptocurrency.
False claims for 2021 and 2022
King’s declared assets in both 2021 and 2022 were significantly lower than what he truly owned. In 2021, he declared assets worth approximately 1.2 billion won, but prosecutors believed he owned 9.9 billion won in cryptocurrency at the time.
Kim defended him
Despite being a serious taxpayer, Kim Nam-kook last month criticized his party’s push to tax virtual assets, calling it an ineffective move to gain more support. The Democratic Party is currently discussing amending the tax law to increase the tax deduction limit for virtual assets to 50 million won as promised in the last election.
A court decision on his punishment is expected soon, which could set a precedent for how such cases are handled in the future. To regulate such cases, the country needs some solid plan so that no one takes advantage of minimal control over digital assets to profit.
