By George Ward
According to local media reports, the South Korean National Tax Service has begun a “special tax investigation” against one of the country’s leading crypto exchanges, Bithumb. The digital asset service provider is facing a complaint investigation over possible tax evasion involving domestic and international transactions by its subsidiaries and affiliates.
Under The Spotlight
Reports indicate that tax officials from the Korean National Tax Service (NTS) raided the head office of Bithumb, located in Seoul, earlier this week as part of their probe. The tax agency seeks to verify the speculations about possible tax evasion by evaluating Bithumb’s international and local transactions.
In addition, the reports added that the authority is closely monitoring allegations of tax evasion related to the ownership of the crypto exchange. Accordingly, South Korea’s 4th Bureau of Investigation of the Seoul Regional Tax Service started the investigation to probe particular tax offenses rather than a formal investigation.
The embattled crypto exchange was previously under a special tax investigation in 2018 by the NTS. But Bithumb managed to win close to $64 million in income tax.
Meanwhile, the latest development comes after prosecutors cleared the former chair of Bithumb Lee Jung-Hoon of a fraud charge involving $70 million. A week before his acquittal on December 30, Bithumb’s largest shareholder, Park Mo, was found dead.
The regional authorities investigated the deceased for money laundering and stock price manipulation. Furthermore, the late Park Mo was the latest in several digital asset billionaires who died under unexplained circumstances within a month of each other.
Others who have died in such a situation include Nikolai Mushegian, the CEO of MakerDAO, and Tiantian Kullander, co-founder of the Amber Group. Meanwhile, industry skeptics pointed to the FTX fallout as one of the reasons for the sudden deaths of those billionaires.
In light of the FTX debacle, regulators across the globe are keeping a close watch on the crypto industry as the effects of the turmoil continue to impact the space.
Regulating South Korea’s Crypto Space
The current South Korean president, Yoon Sukyeol, assumed office in May 2022 when the Terra UST stablecoin crashed, wiping billions of dollars from the crypto market. As a crypto-friendly president about to oversee his country’s growth in terms of blockchain technology innovation, that was a rough beginning.
With the authorities still handling the case of Do Kwon, the founder of Terraform Labs, the parent company of the TerraUSD and Luna tokens, the country has taken a hard stance on crypto trading. The regulations governing the activities of virtual asset services providers, NFT, and decentralized finance (DeFi), are based on guidelines issued by financial authorities rather than legislation.
As a result, South Korea’s crypto space is slowly evolving, and digital asset businesses are seeking legal guidelines to avoid facing regulatory issues. As things stand, South Korea focuses on investor protection and financial market stability rather than creating and implementing regulatory policies.