South Korea Authorities Investigate Lawmaker Over Suspicious Crypto Transfers: Report

Local media reports Democratic Party lawmaker Kim Nam-kuk had previously co-sponsored a bill seeking to defer taxation on crypto profits.

AccessTimeIconMay 8, 2023 at 9:15 a.m. UTC
Updated May 8, 2023 at 9:32 a.m. UTC

South Korea's financial watchdog has reported to local prosecutors a series of crypto transactions by an opposition party lawmaker, which has sparked domestic outrage over a potential conflict of interest.

Rep. Kim Nam-kuk of the Democratic Party of Korea allegedly withdrew 800,000 WEMIX tokens from late February to early March in 2022, and the transactions were reported to the Financial Services Commission's Financial Intelligence Unit (FIU), according to CoinDesk Korea. Kim's WEMIX holdings stood at 6 billion won ($4.5 million) between January and February 2022.

The FIU classified the withdrawals as suspicious transactions and reported them to the prosecutor's office, the report said.

South Korea implemented global standard-setter FATF's travel rule on March 25, 2022, shortly after Kim reportedly made his withdrawals. The travel rule requires exchanges to collect personal data on transactions and report them to authorities when they exceed a certain threshold.

Kim said that he did not cash out his tokens and did not violate any laws, according to the report. There is no reporting requirement for virtual assets in South Korea's Public Service Ethics Act.

WEMIX was delisted from major exchanges in South Korea last year for allegedly reporting inaccurate circulation supply figures. Its issuing company WeMade unsuccessfully challenged the delisting in court.

Kim had co-sponsored an amendment to the Income Tax Act in July 2021, which included a provision to defer taxation on virtual assets, reported CoinDesk Korea.

South Korea postponed plans to tax income from crypto as well as income from the "transfer or lending" of virtual assets to 2025.

CORRECTION (May 8, 09:32 UTC): Corrects year of FATF travel rule implementation in South Korea.

Edited by Sandali Handagama.


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Lavender Au

Lavender Au is a CoinDesk reporter with a focus on regulation in Asia. She holds BTC, ETH, NEAR, KSM and SAITO.