Gangnam District in Seoul Focuses on Tax Noncompliance in Updated Cryptocurrency Seizure Initiative

The wealthy Gangnam district in Seoul is intensifying its initiative to confiscate cryptocurrency from tax evaders, having seized 340 million won ($244,796) since the conclusion of last year.

This district, which hosts many of East Asia’s wealthiest individuals, has joined other regions in enforcing measures against residents who neglect to fulfill their local tax obligations.

Additionally, it has started to confiscate cryptocurrency from individuals who do not pay various local taxes, including property taxes.

Gangnam Crypto Enforcement

Kyunghyang Shinmun reported that the district has recovered 200 million won ($144,057) in unpaid taxes during the first half of the year through the confiscation of digital currencies.

Garosu-gil, in Seoul’s Gangnam District. (Image: Im Do-bin [CC BY-SA 4.0])

In most instances, the district has accomplished this by cross-referencing its records of unpaid taxes with cryptocurrency wallet information from the country’s five fiat-trading crypto exchanges.

When the district identifies cryptocurrency in the wallets of tax evaders, it takes action by freezing the assets. It then issues a warning: Settle your debts, or we will liquidate your holdings.

In numerous cases, residents interested in cryptocurrency quickly pay their tax dues to prevent the district from selling their tokens.

The district is home to a majority of South Korea’s leading cryptocurrency and blockchain companies, as well as its most notable crypto investors. A tax management official from Gangnam informed the media outlet:

“Many residents of Gangnam possess a considerable amount of virtual assets. […] Upon initiating the seizure of virtual assets, we observed a notable increase in voluntary tax payments.”

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Crypto Whales Claiming Financial Hardship?

The district provided examples of situations where cryptocurrency holders had utilized Bitcoin (BTC) and other tokens to hide their wealth.

In one instance, a resident who had been vocally expressing frustration about insufficient funds to pay taxes was discovered with a wallet containing “more than enough” cryptocurrency to cover their 120 million won ($86,495) property tax obligation.

In another case, a resident with 19 local tax bills, many of which dated back to 2020, asserted he had “no money to pay” the debts.

However, when Gangnam tax officials uncovered and froze his cryptocurrency, the resident “voluntarily settled 1.4 million won ($1,000) in overdue payments.”

New regulations regarding corporate cryptocurrency ownership will soon enable government entities like Gangnam District to create cryptocurrency wallets.

This is expected to streamline and enhance the liquidation process, according to tax officials. The head of the Gangnam District government, Jo Seong-myeong, stated:

“Regardless of the amount, if a resident is a long-term tax evader, we will seize their virtual assets. We will do this without exception.”

Moreover, the Seoul Metropolitan Government has announced plans to establish a cooperative framework with autonomous districts.

This will enable tax officials citywide to conduct coordinated searches and seizures of cryptocurrency assets belonging to tax evaders.

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Korbit Forms Tax Cooperation Agreement with Busan

In related news, the media outlet Kyunghyang Games reported on August 12 that the cryptocurrency exchange Korbit has entered into an agreement with the Busan Customs Office to support its efforts in tracking and confiscating cryptocurrency from long-term tax evaders.

This agreement will enable tax officials to identify and seize cryptocurrency from both active and inactive wallets.

Korbit stated it is actively cooperating with data requests from the Busan Customs Office “in accordance with relevant laws and administrative procedures.” A spokesperson for Korbit elaborated:

“As the cryptocurrency ecosystem becomes more institutionalized, collaboration with public institutions is increasingly vital. Korbit will continue to provide institutional and technical support. We will assist in establishing a transparent tax payment system.”

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