The affluent Seoul district of Gangnam is ramping up its crypto confiscation initiative for tax evaders, seizing 340 million won ($244,796) since the end of last year.
The district, which is home to many of East Asia’s richest people, has joined others in cracking down on residents who fail to pay their local taxes.
But it has also begun seizing crypto from residents who fail to pay other local levies, including property taxes.
Gangnam Crypto Crackdown
Kyunghyang Shinmun reported that the district has recouped 200 million won ($144,057) in unpaid taxes in the first half of the year by confiscating coins.
In most cases, the district has done this by cross-checking its data on unpaid taxes against crypto wallet data from the nation’s five fiat-trading crypto exchanges.
When the district finds coins in tax evaders’ wallets, it responds by freezing the funds. It then delivers an ultimatum: Pay up, or we will liquidate your coins.
In many cases, crypto-keen residents rush to settle their tax bills before the district sells off their tokens.
The district is home to most of South Korea’s biggest crypto and blockchain firms, as well as its most prominent crypto investors. A Gangnam tax management official told the media outlet:
“Many residents of Gangnam own a significant amount of virtual assets. […] When we started seizing virtual assets, we saw a significant rise in voluntary payments of outstanding tax bills.”
Crypto Whales Pleading Poverty?
The district gave examples of cases where crypto owners had used Bitcoin (BTC) and other tokens to conceal their wealth.
In one case, a resident who “had been complaining angrily about not having enough money to pay taxes” was found with a wallet containing “more than enough” crypto to pay their 120 million won ($86,495) property tax bill.
In another instance, a resident with 19 local tax bills, many of which dated back to 2020, claimed he had “no money to pay” the bills.
But when Gangnam tax officials discovered and froze his crypto, the resident “voluntarily paid 1.4 million won ($1,000) in arrears.”
New rules governing corporate crypto ownership will soon allow government organs like Gangnam District to open crypto wallets.
This will make the liquidation process easier and more effective, tax officials claim. The head of the Gangnam District government, Jo Seong-myeong, said:
“Regardless of the amount, if a resident is a long-term tax evader, we will seize their virtual assets. We will do this without exception.”
Furthermore, the Seoul Metropolitan Government says it is creating a cooperative system with autonomous districts.
This will allow tax officials throughout the city to conduct bulk searches and seizures of tax evaders’ crypto funds.
Korbit Strikes Busan Tax Cooperation Deal
Meanwhile, the media outlet Kyunghyang Games reported on August 12 that the crypto exchange Korbit has agreed to work with the Busan Customs Office to assist its own efforts to track and seize crypto from long-term tax evaders.
The deal will let tax officials identify and seize crypto from both active and dormant crypto wallets.
Korbit says it is actively cooperating with Busan Customs Office data requests “in accordance with relevant laws and administrative procedures.” A Korbit spokesperson explained:
“As the cryptoasset ecosystem becomes increasingly institutionalized, collaboration with public institutions is becoming increasingly important. Korbit will continue to provide institutional and technical support. We will help establish a transparent system for paying tax.”
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