South Korean Ex-Lawmaker Faces 6-Month Prison Sentence for Hiding $6.8M in Crypto Profits

Highlights:

• South Korean Congressman faces prison sentence for hiding $6.8 million in crypto profits from 2021 to 2022.
• Prosecutors claim he misled the National Assembly’s Ethics Committee.
• South Korea remains a crypto powerhouse with $18 billion in daily trading.

Kim Nam-guk, a former legislator for the Democratic Party of South Korea is accused of hiding his cryptocurrency assets during his tenure as a member of the National Assembly. Prosecutors requested a six-month jail sentence for Kim.

They claimed that Kim intentionally misled the National Assembly’s Ethics Committee during his 2021 and 2022 asset declarations. This committee oversees the review of lawmakers’ financial disclosures.

In 2021, Kim declared his total assets as around 1.2 billion won (around $835,000). Next year, he faced charges for repeating the violation. He hid an additional 990 million won ($689,000). He transferred a large portion of his crypto into a regular bank account. This made it seem like he wasn’t holding any digital coins.

🚨 JUST IN: South Korean Congressman Kim Nam-kuk is sentenced to six months in prison for concealing $6.8M in crypto holdings. pic.twitter.com/V9tmybnBV2

— Coinwaft (@coinwaft) December 18, 2024

South Korea’s Crypto Market

South Korea has one of the world’s busiest crypto markets. Digital assets are as popular as stocks there. The crypto rise started in 2013 when exchanges like Korbit and Bithumb began. Around 10% of people invested in Bitcoin and other tokens in 2017. Local crypto prices stored 20-40% higher than global prices, creating the “kimchi premium.”

 The government banned Initial Coin Offerings (ICOs) in 2017 due to fraud concerns. They also introduced stricter rules for cryptocurrency exchanges. These include real-name trading, which requires users to verify their identities through bank accounts.

In 2021, it required VASPs to register with the Financial Intelligence Unit (FIU) to follow anti-money laundering laws. South Korea remains a leader in crypto even with stricter rules. This month, daily crypto trading volumes hit $18 billion, 22% higher than the stock market. Exchanges like FameEX, Upbit, and OKX experienced billions in daily transactions. FameEX recorded $8.7 billion in trades in November.

Kim Criticizes Strict Crypto Tax Laws

South Korea has delayed its cryptocurrency tax law. The law was set for next year but is now postponed to 2027. It aims to impose a 20% tax on cryptocurrency gains. Despite serious tax charges, Kim criticized his party’s push for virtual asset taxation last month. He called it an ineffective attempt to gain public support. The Democratic Party is working on changes to the tax law. These changes would raise the tax deduction limit for virtual assets to 50 million won. This is a promise made during the last election.

🚨 South Korea is moving forward with a 20% crypto tax plan starting in 2025! 🇰🇷💰

While the tax was delayed twice, the ruling party is now committed to its implementation. They've raised the tax exemption limit from 2.5 million KRW to 50 million KRW ($1.8K to $35.9K), which… pic.twitter.com/6bBOk6nY2d

— Crypto B 👑 (Never DM first) 🇧🇷 (@TheCrypto_B) November 20, 2024

A former Woori Bank employee was recently sentenced to 15 years in prison for stealing $12.4 million to finance a failed crypto investment. He forged loan documents using 17 customers’ names and took money from friends’ accounts. He spent over $10.4 million on cryptocurrencies and lost $4.35 million. The court took $3 million in assets, but $4 million can’t be recovered. The defendant must pay the bank $7.3 million in damages.