The South Korean government has recently had a deep interest in Metaverse and Web 3 technology, yet the country still implements aggressive policies when it comes to introducing regulations and taxes.
As reported by local news agency Yonhap News on Thursday, the South Korean Tax Authority seized 260 billion won ($184.3 million) in cryptocurrencies from tax evaders. However, the agency froze that money between 2021 and 2022.
The most money seized from a tax evader was $8.87 million, according to data provided by lawmaker Kin Sang Hoon. He reported that the defendant held Bitcoin and Ripple, among other cryptocurrencies.
It is worth noting that cryptocurrency exchanges in South Korea are responsible for providing data about their customers to tax authorities. Similarly, the agency has been cracking down on tax evaders since the beginning of this year and confiscating millions of crypto assets.
Tax authorities freeze the crypto assets of tax evaders after exchanges identify delinquents. Then, if the tax amount remains unpaid, officials will sell the seized assets at market prices.
The report on the confiscation of crypto assets due to unpaid taxes comes two months after South Korean authorities announced that the decision to impose a 20% tax on cryptocurrency profits has been postponed to 2025.
Kim Sang-hoon, a member of the National Assembly’s Finance and Strategy Committee and a lawmaker from South Korea’s right-wing People’s Power Party, gathered information on cryptocurrency asset seizures. The report also includes statistics from the finance ministry and other agencies.
South Korea has strict cryptocurrency regulations
After TerraLuna’s demise, state agencies have heated up about cryptocurrency regulations. Regulators have scrutinized many cryptocurrency exchanges operating in South Korea. Months-long investigations have prompted South Korean authorities to implement strict regulations targeting cryptocurrency-related risks.
Subsequently, many cryptocurrency exchanges closed their stores due to tightened KYC and AML rules. While others are currently providing data to the government about customers under regulations.
Although South Korean authorities initially started freezing crypto assets of tax evaders in 2020. The 2021 Tax Law Amendment Bill empowered the National Tax Service (NTS) by giving the agency the power to seize crypto assets without waiting for court approval. This Act takes effect on January 1, 2022.
An official explained that the amendment is aimed at curbing the growing number of tax evaders.
Ministry officials added at the time;
“Asset seizure procedures cannot be conducted when the assets requested by the government are kept in e-wallets. The amendment would allow for direct seizure without a court change in ownership records. Assets held by tax evaders in the form of digital currency are also inevitably confiscated.”