Suspicious Crypto Transactions
A report sent to local prosecutors by South Korea’s financial authority about a number of cryptocurrency transactions made by a politician from an opposition party went viral online. In which the aforementioned report caused a domestic uproar due to a possible conflict of interest.
According to the contentious report, Rep. Kim Nam-kuk of the Democratic Party of Korea allegedly withdrew 800,000 WEMIX tokens in 2022 during late February and early March. Additionally, according to CoinDesk Korea, the Financial Intelligence Unit of the Financial Services Commission received notification of the aforementioned transactions.
It is important to note that between January and February of 2022, Kim’s WEMIX holdings totaled 6 billion won, or around $4.5 million. The aforementioned withdrawals were apparently labeled as suspicious transactions by the FIU. Additionally, the prosecutor’s office has received a report on it.
Kim Against South Korea’s Newly Implemented Rule
Bear in mind that on March 25, 2022, just days after Kim allegedly withdrew, South Korea put into effect the travel rule established by the worldwide standard-setter FATF. The aforementioned travel rule mandates that exchanges gather personal information about transactions.
When they reach a specific threshold, the aforementioned data gathered by the respective exchanges would subsequently be transmitted to the appropriate authorities. Kim, however, remained steadfast in his assertion that he didn’t cash out his tokens and didn’t break any rules. In light of this, it is important to note that the Public Service Ethics Act of South Korea does not include a reporting obligation for virtual assets.
It’s also important to note that WEMIX was removed from the main exchanges in South Korea last year on claims that its data on supply and circulation were false. This prompted the issuing business WeMade to attempt a failed legal appeal to the delisting.
Additionally, Kim co-sponsored a modification to the Income Tax Act in July 2021 that included a provision to postpone taxation on virtual assets, according to CoinDesk Korea. To tax cryptocurrency income as well as income from the “transfer or lending” of virtual assets, South Korea had originally planned to do so until 2025.
