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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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In an eye-opening case that reflects South Korea’s rigorous stance on crypto regulation, Kim Nam-guk, a former Democratic Party congressman, is facing legal repercussions for concealing substantial crypto holdings.
According to a local source, Prosecutors have requested a six-month prison sentence for Kim, accusing him of deliberately falsifying asset declarations submitted to the National Assembly.
This has been handled as a high-profile case because of the growing debate surrounding cryptocurrency taxation and governance in South Korea.
Congressman Concealed $7.5M Crypto Holdings: Is Crypto Illegal?
Prosecutors allege Kim actively sought to deceive the National Assembly’s Ethics Committee, which is responsible for reviewing lawmakers’ financial disclosures.
During his 2021 and 2022 asset declaration processes, Kim reportedly took deliberate steps to obscure the extent of his cryptocurrency wealth.
In 2021, Kim declared total assets of approximately 1.2 billion won.
However, prosecutors argue that he actually held around 9.9 billion won in cryptocurrency at the time.
To disguise this disparity, Kim allegedly transferred a portion of his crypto holdings into a regular bank account, making it appear as though he had converted his digital assets into fiat currency.
Additionally, he reportedly converted other cryptocurrency holdings back into coins to ensure the total assets matched the declared amount.
This scheme, prosecutors claim, allowed Kim to evade proper scrutiny by the National Assembly Ethics Committee and mask the significant profits he had made from crypto investments.
Kim manipulated his financial disclosures to prevent the committee from accurately reviewing his assets, a violation that has severe legal consequences in South Korea.
Political and Legal Implications
Kim’s actions come at a time when the Democratic Party is actively debating virtual asset taxation policies.
Kim has been vocal in criticizing his party’s push for stricter crypto tax regulations, labeling them ineffective measures to garner public support.
Despite these criticisms, the Democratic Party has proposed revising tax laws to increase the tax deduction limit for virtual assets to 50 million won.
A report in November shows that South Korea’s ruling Democratic Party of Korea (DPK) has confirmed plans to implement a long-delayed cryptocurrency tax in January 2025.
Initially set for 2022, the 20% tax (22% with local taxes) faced delays due to investor backlash, but adjustments to ease concerns are now being made.
Key amendments include raising the tax exemption threshold from 2.5 million won ($1,795) to 50 million won ($35,919) in annual gains, significantly reducing the number of affected investors.
The plan also allows taxpayers without detailed purchase records to calculate taxes using a percentage of the sale price.
Notably, a crypto case similar to Kim’s occurred recently. According to a December 18 report, a former Woori Bank employee in South Korea was sentenced to 15 years in prison for embezzling $12.4 million to fund a failed crypto investment spree.
The employee, who was in his 30s, forged loan documents under the names of 17 customers. He then embezzled the money from acquaintances’ accounts before transferring it to his own.
He spent over $10.4 million on cryptocurrencies, losing $4.35 million in failed investments. The remainder went toward paying off personal loans and living expenses.
Despite confiscating $3 million worth of assets, the court deemed at least $4 million unrecoverable and ordered the defendant to pay the bank $7.3 million in damages.
The court’s forthcoming decision on Kim’s punishment is expected to set a significant precedent for crypto taxation in South Korea.
