28.11.2021

South Korea Internal Revenue Service Seizes $ 22 Million Cryptocurrency

The city government of Seoul, the capital of South Korea, has announced the seizure of cryptocurrencies in the amount of 25 billion won, or $ 22 million. This amount in coins was confiscated from individuals and company executives.

According to the local news outlet The Korea Times, the confiscated cryptocurrency came from people identified as tax offenders by the city’s tax agency. That is, in fact, it became a punishment for tax evasion. Let’s talk about the situation in more detail.

Let’s start with an explanation. Cryptocurrencies operate on the basis of decentralized blockchains, in which there is no single main body. That is why it is possible to carry out various transfers in networks without approval from the “top”, and users are responsible for the security of their own assets. To do this, they need to securely store the so-called seed phrase or private key – a unique combination of words or letters and numbers that are a universal access code to the contents of a certain cryptocurrency address.

That is, in general, such a concept excludes the possibility of confiscation of funds by governments and other regulatory bodies. However, if an investor transfers his coins to the exchange, in fact, he loses full ownership of them, because cryptocurrencies in this case are stored on the wallets of trading platforms.

And this allows, if something happens, to freeze wallets and withdraw funds. This practice is sometimes necessary because exchanges can block funds from hackers who have stolen other people’s coins. However, sometimes problems can arise for those who forgot to pay taxes. This is exactly what the South Koreans faced.

How can they pick up cryptocurrency

As part of the investigation, the Seoul National Tax Service identified 1,566 individuals and company executives with unfulfilled tax obligations. After that, the tax office in Seoul proceeded to seize $ 22 million in digital currencies owned by 676 citizens who hold coins on three crypto exchanges.

As a reminder, with mandatory cryptocurrency trading using real names in South Korea, government agencies can request data on client trading on cryptocurrency exchanges. Companies must also comply with strict reporting requirements for cryptocurrency transactions.

According to the tax office, 676 individuals owed about $ 25 million in taxes, and since the arrest, 118 of them have transferred more than a million dollars to the government. In a statement quoted by The Korea Times, the city government said tax offenders have urged regulators not to liquidate the confiscated cryptocurrency. Here’s a quote from Cointelegraph.

We believe that taxpayers anticipate further increases in the value of their cryptocurrencies due to the recent surge in cryptocurrency prices, and have determined that they will get more from paying their tax arrears and exemption from seizure.

That is, the owners of the cryptocurrency believe that the value of their cryptocurrencies will increase significantly in the near future. It is possible that such a position was the result of a fresh fall in the dominance of Bitcoin in the coin niche. In 2017-2018, this led to sharp jumps in the value of altcoins, that is, other cryptocurrencies.

Bitcoin accounted for 19 percent – the largest share of the $ 22 million in cryptocurrency confiscated by the government. Other popular tokens include DragonVein and XRP at 16 percent each, with Ethereum accounting for a tenth of the total seized digital currencies.

We believe that this situation clearly demonstrates what is happening in another country, where financial regulators are acting quite tough. In addition, she once again reminds that storing coins on cryptocurrency exchanges – albeit the most popular ones – does not in fact guarantee the fact of full ownership of them. Indeed, if questions arise, the user will have to prove their ownership of the crypt and even show the sources of the origin of funds.

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