After The Kim Nam-guk Incident, Suspicious Accounts Are Being Frozen

After National Assembly member Kim Nam-guk raised suspicions about holding large amounts of cryptocurrency, financial authorities started imposing stringent standards and restricting transactions on even slightly suspicious accounts.

Previously, overseas virtual asset transactions were comparatively unrestricted if taxes were properly paid. However, it is now reported that failure to provide explanations for investing in domestic exchanges, including details about the source of principal and the investment process, may result in an investigation. Standards are becoming more stringent, particularly in areas where regulations are ambiguous. This prevailing atmosphere is also evident in the statistics from the Financial Intelligence Unit (FIU), responsible for collecting information on suspicious transactions. The total number of reported suspicious transactions to the FIU is increasing.

An FIU official stated that due to the recent rise in cryptocurrency-related cases, financial authorities are adopting a stricter stance not only on virtual asset-related crimes but also on money laundering and tax evasion. Furthermore, the FIU official added that if ownership of the investment principal, its source, profit size, and the sequence of associated accounts cannot be confirmed, they are often reported as suspicious or frozen.

A coin industry official stated that as recently as 2020, when there were inadequate laws and loopholes, tens to hundreds of billions of won worth of overseas funds aimed at exploiting the ‘kimchi premium’ flowed into and out of the country. They added that it is encouraging that the virtual currency market is becoming cleaner following the Kim Nam-guk incident. However, they also expressed regret that a government-regulated framework has transformed virtual currency, which is built on the principle of decentralization, into a mere investment product.