Ex-South Korean lawmaker faces 6-month prison sentence for hidden cryptocurrency possessions

Kim Nam-guk, a former South Korean lawmaker from the Democratic Party, is under legal scrutiny for allegedly concealing significant cryptocurrency holdings in his 2021 and 2022 asset declarations.

He is accused of embezzling millions in crypto profits and transferring assets to bank accounts.

Hidden Crypto Profits

According to local news outlet Donga, prosecutors have requested a six-month prison sentence for Kim, alleging that he hid 9.9 billion won, worth approximately $6.8 million, in crypto assets. The allegations include deliberate omissions of key financial details, such as crypto profits of 1.2 billion won in 2021 and 990 million won in 2022, valued at $835,000 and $689,000, respectively.

To cover these discrepancies, Kim is accused of transferring some of his crypto holdings to regular bank accounts, making it look like he had converted his digital assets into fiat currency. His case shed light on the ongoing debate surrounding South Korea’s crypto regulations, especially as the country moves toward implementing a long-debated crypto tax.

This tax, which will take effect in January 2025, was originally planned for 2022, but suffered delays due to political disagreements. Under the new policy, the tax exemption threshold for crypto earnings will increase significantly, reducing the number of affected investors. Kim’s case is particularly notable given his vocal criticism of his party’s position on crypto taxation, further complicating the issue.

The case comes amid other high-profile crypto-related legal actions in South Korea, including the recent conviction of a former bank employee who embezzled millions from failed crypto investments. Kim’s trial is expected to set a key precedent for future crypto tax legal and policy actions in the country.

Meanwhile, South Korea’s financial watchdog, the Financial Supervisory Service (FSS), has taken a restrictive stance toward crypto-related investments, blocking ETFs focused on companies like Coinbase. The move is part of the country’s broader regulatory environment, which continues to struggle amid increasing political unrest.

South Korea’s Crypto Trading Volume Soars

It is important to note that South Korea is home to one of the largest crypto markets in the world, and trading has become very popular in the country in recent years. In fact, its crypto market saw a historic spike in trading volumes on December 3, when it hit $34.6 billion amid the martial law announcement. XRP was the most prominent asset, generating $28 billion in transactions on Upbit.

Bitcoin faced a brief 30% drop during a “crack flash” but quickly recovered. The record trading volume coincided with the government’s declaration of martial law.

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