South Korean Officials Confiscate $47 Million In Crypto Assets Due To Tax Evasion

CryptoMode IRS Tax Delays Tax Evasion

Although people assume things to be different with cryptocurrencies, that isn’t always the case. When it comes to financial assets, there is always a chance of law enforcement confiscating value. It all comes down to how one behaves and which security precautions they take to store their wealth securely.

Crypto Funds Seizures in Korea

Although South Korea is a prominent region for cryptocurrencies, there will always be users who try to trick the system in one way or another. Doing so is a lot easier than one may think, as one can leverage the perceived privacy of crypto assets for many different purposes. However, getting away with nefarious activities is a very complex matter as these currencies all lack anonymity and privacy by default.

Performing illicit activities with Bitcoin and other cryptocurrencies is often a bad day. That situation only becomes exponentially problematic when engaging in tax evasion. It is impossible to evade taxes with crypto assets in an era of government scrutiny and blockchain analysis firms. Therefore, attempting to do so is often futile and will come back around sooner or later.

Several thousand people in South Korea found that out the hard way. In total, over $47 million in various crypto assets have been seized by law enforcement. In addition, tax evasion charges were filed against over 12,000 people after a probe that lasted for months. However, the overarching investigation monitors as many as 140,000 people who may have engaged in tax evasion activities. Not all of them engage in crypto assets, however.

Whenever stories like these occur, several questions need to be answered. The first one is whether users stored these funds on an exchange or in online custodial wallets. If so, seizing the assets is often a lot more straightforward. However, if not, it makes one wonder whether any funds have been seized at all, as doing so is impossible without access to the private keys. 

Are Exchanges Helping Out?

Another factor to consider is how this probe became so successful. Investigating tax evasion is one thing, but linking cryptocurrency transactions to a real-world identity is a very different ordeal. The only reliable way to do so is either through blockchain analysis firms – which is costly and time-consuming – or by collaborating with exchanges and trading platforms.

Most criminals tend to forget how the conversion from crypto to fiat is not done anonymously. All platforms and service providers will force users to verify their identities. Those rules are rather strict in South Korea, leaving little room for error. It would be unwise to verify one’s identity first and then begin a tax evasion venture through platforms that already know who you are.

For now, the exact details regarding this investigation remain unclear. However, it is a significant seizure for back taxes, and exchanges and brokers may have facilitated some activity. For exchanges operating in South Korea, complying with regulatory requirements remains a pressing matter. Time is running out for all of these companies, as the deadline expires in September 2021.

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