More Seoul districts will seize and liquidate crypto from citizens who fail to pay their local taxes, as South Korea’s regions step up a nationwide crackdown.
The South Korean media outlet EDaily reported that Gwanak, a district in Southern Seoul, will demand that the nation’s five fiat-trading crypto exchanges hand over data on residents who have fallen into “arrears.”
Seoul Districts Hunt for Crypto
The district, like officials in the Seoul satellite city of Gwacheon, says it is responding to recent “rises” in the “transaction volume of the virtual assets market.”
Gwanak officials said they will probe a “total of 325 delinquent taxpayers” in the next few weeks. The group collectively owes the Gwanak District 1.036 billion won (over $714,000).
Gwanak District on a map of Seoul. (Source: Kurykh [CC BY-SA 3.0])
In previous years, provinces and metropolitan cities have conducted similar campaigns. They have seized millions of USD worth of Bitcoin (BTC) and other tokens from local tax evaders.
But Gwanak’s move appears to indicate that individual Seoul districts will now launch independent probes into “habitual” tax dodgers.
Gwacheon’s own move also indicates that the same is now becoming true of smaller South Korean cities.
If they find crypto belonging to these individuals, districts and smaller city governments will freeze their crypto wallets.
If token holders do not settle their tax bills, South Korean tax bodies of all sizes now have the power to liquidate coins.
Scanning Wallet Data
Gwanak said it was working “in cooperation with the Seoul Metropolitan Government.”
The Gwanak District Chief Park Jun-hee said that the crypto wallet probe would help “completely block unscrupulous tax delinquents” from “abusing cryptoassets as a means of hiding their wealth.”
Seoul Districts, provinces, and major cities derive their powers to force crypto exchanges to do their bidding from two major sources.
The first is a 2018 Supreme Court ruling. The court determined that Bitcoin and other tokens are “intangible assets with property value.” This renders them “subject to confiscation.”
The second came in 2022, when lawmakers approved an amendment to the Local Tax Collection Act.
The clause allows local tax bodies to launch “seizure and liquidation procedures” for “delinquent taxpayers’ virtual assets.”
In recent months, tax bodies around the country have sought to capitalize on this. Many have invested in tools that let them match their own information on tax evaders with crypto exchange wallet data.
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