Controversial WEMIX Crypto Transactions by South Korean Lawmaker Spark Outrage

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A series of cryptocurrency transactions involving South Korean Democratic Party lawmaker Kim Nam-kuk have ignited public fury and raised concerns about a possible conflict of interest. This comes after local media revealed that Kim had co-sponsored a bill to postpone taxation on cryptocurrency profits.

Suspicious Transactions Reported to Prosecutors

South Korea’s financial watchdog, the Financial Services Commission’s Financial Intelligence Unit (FIU), reported to local prosecutors that Rep. Kim Nam-kuk allegedly withdrew 800,000 WEMIX tokens between late February and early March 2022. At the time, Kim’s WEMIX holdings were valued at 6 billion won ($4.5 million) from January to February 2022.

The FIU deemed the withdrawals suspicious transactions and reported them to the prosecutor’s office.

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South Korea adopted the Financial Action Task Force’s (FATF) travel rule on March 25, 2022, shortly after Kim reportedly executed his withdrawals. The travel rule mandates exchanges to gather personal transaction data and report them to authorities when exceeding a specific threshold.

Kim defended his actions, stating that he did not cash out his tokens and did not violate any laws. South Korea’s Public Service Ethics Act has no reporting requirement for virtual assets.

WEMIX Delisted from Major South Korean Exchanges

WEMIX, the cryptocurrency in question, was delisted from major South Korean exchanges last year for allegedly providing inaccurate circulation supply figures. WeMade, the company that issued WEMIX, unsuccessfully contested the delisting in court.

In July 2021, Kim Nam-kuk co-sponsored an amendment to the Income Tax Act, which incorporated a provision to defer taxation on virtual assets. As a result of the amendment, South Korea delayed its plans to tax income from cryptocurrency and income from the “transfer or lending” of virtual assets until 2025.

The controversy surrounding the opposition party lawmaker’s cryptocurrency transactions highlights the ongoing debate surrounding regulating and taxation of virtual assets in South Korea. The situation underscores the importance of maintaining transparency and ethical conduct among public officials, especially when dealing with rapidly evolving financial technologies like cryptocurrencies.

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