Cryptocurrencies To Watch

Tag: South Korea

  • South Korean Congressman Bags 6-Month Jail Term for Concealing Over $6.8M in Crypto

    South Korean Congressman Bags 6-Month Jail Term for Concealing Over $6.8M in Crypto

    A South Korean lawmaker has been sentenced to six months in prison for failing to disclose over 9.9 billion won, equivalent to $6.8 million in crypto assets.

    According to a local source, Kim Nam-kuk, the convicted Congressman, was found guilty of violating South Korea’s Public Official Ethics Act. This act mandates the disclosure of all significant assets, including crypto holdings.

    Kim Converts Cash to Crypto

    The prosecutors noted that Kim deliberately concealed his crypto portfolio by transferring assets across bank accounts to conceal significant profits from crypto investments. This reportedly occurred during his property declarations in 2021 and 2022, while he converted the remaining funds back into crypto to align with his declared total assets.

    This case has gained significant attention due to the ongoing debate over digital asset taxation and regulatory policies in South Korea. Prosecutors also argued that this scheme enabled Kim to avoid thorough examination by the National Assembly Ethics Committee, concealing the substantial profits he earned from crypto investments.

    By altering his financial disclosures, Kim obstructed the committee’s ability to assess his assets accurately, an offense that carries serious legal repercussions in South Korea.

    South Korea’s Crypto Implementation

    Kim’s actions unfold amid the Democratic Party’s ongoing discussions on virtual asset taxation policies. He has openly criticized the party’s efforts to impose stricter crypto tax regulations, dismissing them as ineffective attempts to gain public support.

    However, the Democratic Party has proposed to amend tax laws, raising the tax deduction limit for virtual assets to 50 million won (over $37,000).

    A November report revealed that the country’s ruling Democratic Party of Korea (DPK) has finalized plans to implement a long-awaited crypto tax in January 2025. Initially scheduled for 2022, the country’s 20% tax (22% including local taxes) was postponed following resistance from investors, but modifications to address these concerns are provided.

    Significant changes involve increasing the tax exemption limit from 2.5 million won ($1,795) to 50 million won (approximately $35,500) in annual profits, significantly decreasing the number of investors impacted.

    Meanwhile, the lawmaker’s six-month sentencing comes as a Chinese official received a life prison sentence for selling sensitive and classified state secrets to an unauthorized third party for crypto. Ministry of State Security agents uncovered the official’s activities, revealing he had received over $140,000 via crypto transactions involving Monera tokens.

  • South Korea to Permit Institutions to Accept Crypto Donations

    South Korea to Permit Institutions to Accept Crypto Donations

    The South Korean government plans to allow institutions, including universities and local governments, to cash out donated and confiscated crypto starting next year. If this is realized, it will gradually allow corporations to open virtual asset won accounts. Notably, the authorities previously blocked these from opening such accounts.

    A virtual asset won account is a type of digital asset account that allows users to manage and store digital assets, such as crypto and other digital currencies.

    Interestingly, many worldwide nonprofits already accept crypto donations, reflecting its growing recognition as a legitimate donation means. Some notable examples include the American Cancer Society and the American Red Cross. These organizations have partnered with crypto payment processors like Coinbase to accept donations in various digital assets.

    Accepting Crypto Donations

    In line with the latest plans, South Korea’s Financial Services Commission is set to release a roadmap by the end of this month for allowing corporations to open virtual asset won accounts. Currently, corporations can not open these accounts because banks restrict issuance based on anti-money laundering guidelines.

    The plan is to roll out the account opening in phases, starting with central government ministries, local governments, public institutions, universities, and non-profit corporations. These entities will only need to cash out donated virtual assets rather than invest in crypto.

    In the second stage, crypto exchanges and related businesses can open won accounts. The government claims to advance the crypto industry by allowing businesses to open their accounts. However, there are concerns that the Asian country is slow in allowing general and financial companies to engage in other crypto transactions.

    Why the New Plan?

    South Korea’s financial authorities have explained that allowing corporations to hold virtual asset won accounts is a necessary step, given the existing reality of the crypto market. Despite maintaining that crypto is not an investment asset, the authorities acknowledge the need to institutionalize it, especially considering United States President-elect Donald Trump’s proposal to stockpile 1 million BTC.

    However, the authorities are cautious, restricting account issuance to general corporations and financial institutions until detailed regulations and infrastructure are established. Additional legislation is required to address the needs of the crypto market fully.

    Meanwhile, as the use of crypto for donations continues to grow, more institutions, ministries, and local governments in South Korea and other parts of the world are likely to explore this new funding method.

  • South Korean Crypto Investor Bags 5 Years Jail-Term Over $427,800 Theft

    South Korean Crypto Investor Bags 5 Years Jail-Term Over $427,800 Theft

    A South Korean court has sentenced a civil servant to five years in prison for embezzling approximately $427,800 (600 million won) in public funds. The civil servant at Cheongju City Hall was responsible for student work activities and North Korean defector settlement support projects.

    Sentenced to Five Years Jail-Term

    The embezzlement, which started in January 2017, lasted seven years and involved forging various official documents. The stolen funds were used to invest in crypto and stocks. He also used part of it to pay off personal debt.

    The civil servant likely invested the embezzled funds in crypto, intending to make returns and replace the money before being caught. This strategy, often called “robbing Peter to pay Paul,” is common in embezzlement and other financial misconduct cases.

    Perpetrators often attempt to use investments or other financial instruments to replace stolen funds, but these schemes can be complex and challenging to sustain. Whichever reasons he may have had for investing in crypto with stolen funds, the plan ultimately backfired, and he was caught and brought to justice.

    Judge Kwon No-eul of the Cheongju District Court stated that the defendant’s repeated offenses over a long period, combined with the fact that only a portion of the damages were paid, contributed to the severity of the sentence.

    Not the First

    Recently, a Chinese government official was also sentenced to life imprisonment for betraying national trust by selling classified state secrets to an unauthorized third party. Foreign agents exploited his vulnerability, offering him compensation for classified data. He eventually supplied the internal documents for significant sums, receiving over $140,000 via crypto transactions. 

    Chandrahar SR, a former Indian police inspector, was also charged with stealing about $216,000 worth of Bitcoin from hackers. As part of the investigation team, he allegedly accessed the hackers’ Bitcoin wallets and transferred the funds to his accounts while destroying the evidence to cover his tracks.

    Officials’ misuse of power to engage in criminal activities can have far-reaching consequences. To prevent such abuses, the government should have robust systems of accountability and transparency in place. This includes measures such as periodic investigations and whistleblower protection laws.

  • South Korea Investigates Upbit For About 600K KYC Violations

    South Korea Investigates Upbit For About 600K KYC Violations

    South Korea’s largest crypto exchange, Upbit, is being scrutinized for significant Know-Your-Customer (KYC) violations during its local license renewal.

    KYC is a crucial regulatory requirement designed to prevent illegal activities like money laundering and fraud by ensuring that users are correctly identified. Violations of these standards can lead to severe penalties for companies in the crypto industry.

    Over 500,000 KYC Violations

    A local report confirmed that South Korea’s Financial Intelligence Unit (FIU), part of the Financial Services Commission (FSC), has uncovered potential violations of KYC regulations on Upbit’s platform, involving between 500,000 and 600,000 cases.

    The authorities noted that they discovered the customer verification breaches while evaluating Upbit’s business license renewal. These alleged breaches could seriously affect the exchange’s ability to continue operating in the country, especially as regulatory scrutiny intensifies.

    In South Korea, crypto exchanges or virtual asset service providers (VASPs) must establish strict KYC procedures.

    Failed KYC Implementation

    Investigations into Upbit’s operations also revealed that the exchange failed to implement its KYC procedures properly. Reports highlighted instances where user-submitted identification documents were unclear, with blurred names or registration numbers.

    The exchange approved and opened accounts despite these issues without addressing these verification discrepancies. Accounts created with such questionable documents could potentially facilitate criminal activities.  

    The FIU will continue its thorough investigation into each suspicious case. However, representatives from Upbit have stated that they cannot share details regarding the ongoing investigation due to legal restrictions.

    Under South Korea’s Special Financial Information Act, crypto exchanges are required to renew their licenses every three years. 

    Failure to comply with KYC regulations could threaten this renewal. Additionally, each violation of the law could result in a fine of up to 1 billion Korean won​ (over $716,000).

    Over $2B Daily Trading Volume

    Launched in 2017, Upbit is recognized as one of South Korea’s leading crypto exchanges and ranks among the largest globally. The exchange has a daily trading volume of $2.2 billion, according to data from CoinGecko.

    The report concerning Upbit’s KYC violations came after the FCS revealed plans to investigate the exchange for possible anti-monopoly violations.

    Upbit’s investigation into monopoly practices was linked to its strong ties with K-Bank, which local authorities have long scrutinized due to its high exposure to crypto exchanges. Reports show up to 70% of K-Bank’s deposits are associated with crypto transactions.

  • South Korea to Review Ban on Spot Crypto ETFs

    South Korea to Review Ban on Spot Crypto ETFs

    South Korea’s financial regulatory agency, the Financial Services Commission (FSC), has revealed plans to re-examine its current ban on crypto exchange-traded funds (ETF), indicating that a shift from the regulator’s previous stringent stance on incorporating crypto assets to the traditional financial market. The agency also founded a Virtual Asset Protection Foundation to handle terminated crypto asset operations accurately.

    South Korea to Re-endorse Crypto

    A local news outlet revealed the FSC’s Thursday announcement that it will set up a new Virtual Asset Committee to examine the country’s virtual asset market and provide and enforce policies on market operators.

    The committee will closely cross-check the issues concerning spot crypto ETF approval in the country and also work to allow virtual asset trading accounts within South Korea just as in the United States.

    Working towards virtual asset adoption, the FSC is also reviewing operation renewal applications from different crypto asset firms and business operators. Thus, crypto companies that submitted complete applications since 2021 can file for a renewal before the end of the year.

    The financial watchdog is working to amend the country’s Specific Financial Information Act (SFIA), giving more attention to the reporting system and ensuring that a stable and effective system for checking unfair trading services and monitoring abnormal transactions is enacted.

    Moreover, the FSC has organized the Virtual Asset Protection Foundation. This non-profit establishment will work closely with the Digital Asset Exchange Association (DAXA) and other agencies to manage and return user assets when centralized exchanges or other crypto firms seize operations.

    “We will review regulations on business operations and entry, and regulations on issuance, disclosure, and listing through the establishment of a statutory association,” the agency stated.

    South Korea’s Crypto Stance

    Since 2018, the South Korean FSC has banned investors from creating crypto trading accounts on exchanges and has remained firm even after the approval of different spot crypto ETFs across other countries.

    South Korea’s Personal Information Protection Commission (PIPC) recently fined decentralized open-source crypto firm Worldcoin Foundation about $830,000 for not adhering to the country’s data protection laws.