South Korean authorities raid cryptocurrency exchanges

The offices of two local cryptocurrency exchanges were raided by prosecutors in South Korea as part of an investigation into the digital assets of lawmaker Kim Nam-kuk.

According to Yonhap, a team of prosecutors from the Seoul Southern District Prosecutor’s Office raided cryptocurrency exchanges Upbit and Bithumb in search of transaction records and other evidence.

Kim’s digital asset wallets are reportedly managed on Upbit and Bithumb.

Immediately following Kim’s resignation from his political party on May 14, authorities searched In May and November of 2022, when he worked on digital asset legislation, he was accused of engaging in shady crypto transactions.

His departure is linked to these allegations.

According to a Facebook post by the former lawmaker, he did not wish to “burden” his party colleagues with the controversy surrounding his crypto dealings.

In the same post, he stated that the accusatory media reports contained “false facts” and that he would “reveal the truth.”

The Korea Times reported on May 8 that Kim liquidated over $4 million in cryptocurrency before the Financial Action Task Force enforced the “Travel Rule.”

Kim is rumored to have supported a bill that would defer from 2023 to 2025 the 20% capital gains tax on cryptocurrencies.

According to reports, Kim stated that he had not cashed out his digital assets but rather transferred them to another exchange. The legislator stated that he was not required to report such conduct.

According to Yonhap, the South Korean politician reportedly owned approximately 800,000 Wemix coins in 2021 ($4.5 million).

In recent months, Bithumb, one of the exchanges where Kim allegedly kept his funds, has been closely monitored by local regulators.

The largest shareholder executive of the exchange was discovered dead in December 2022, shortly after receiving allegations of embezzlement and stock price manipulation.

Less than a month later, on January 10, regulators launched an investigation into Bithumb and raided its offices.

South Korean authorities arrested the owner of the exchange on February 2 on charges of embezzlement and a warrant for his arrest, which included additional charges of dereliction of duty, market manipulation, and fraudulent transactions.

All of these developments in South Korea are the result of a nationwide crackdown on crypto-related activity.

South Korea’s central bank, the Bank of Korea, was granted the authority to investigate operators of cryptocurrency-related businesses on April 24.

As a result of this new authority, banks will be able to request access to crypto transaction data from domestic exchanges.

Two days later, lawmakers approved the initial review of proposed cryptocurrency regulations. The Financial Services Commission will have the authority to investigate and supervise any “digital asset”-related activity under these new regulations.