Concealing Assets with Cryptocurrency? Local Governments Move to Seize Overdue Payments via Cryptocurrency

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[Asia Economy (Daejeon) Reporter Jeong Il-woong] #Individual business owner Mr. A, who was delinquent on local taxes amounting to 10 million KRW, immediately paid the overdue amount after the local government seized cryptocurrency worth 9 million KRW. Another delinquent, Mr. B, who had not paid 5 million KRW taxed in 2008 until recently, settled all arrears only after cryptocurrency worth 17 million KRW was seized.

The seizure of cryptocurrency is playing a key role in increasing the effectiveness of local governments' collection of delinquent taxes. For those holding cryptocurrency as a form of asset concealment, the local governments' seizure of cryptocurrency has become an unexpected move. Behind this is the psychology of delinquents who, considering the high volatility of cryptocurrency, prefer to pay their arrears rather than lose their held cryptocurrency.

Daejeon City recently announced on the 28th that, together with autonomous districts, it checked the cryptocurrency holdings of 14,550 high-amount delinquents through four major domestic cryptocurrency exchanges and seized cryptocurrency worth approximately 219 million KRW held by 39 delinquents confirmed at two exchanges.

As a result, 18 individuals have paid 41 million KRW in arrears so far, and the city explained that other delinquent amounts are also being pursued through collection requests and other enforcement actions.

When cryptocurrency is seized, delinquents are unable to buy or sell the cryptocurrency. Consequently, delinquents who become aware of the trading suspension often feel pressured. Considering the large price fluctuations of cryptocurrency, delinquents may suffer significant losses or have to forfeit investment gains during the suspension period.

For the same reason, some delinquents reportedly pay their entire arrears immediately upon notification of the seizure and request the release of the cryptocurrency seizure.

Kim Ki-hong, head of the Taxation Division of Daejeon City, emphasized, “We will promptly proceed with additional seizures as soon as the results from the remaining exchanges, which have not yet responded with cryptocurrency holding status, are received. In particular, the city’s policy is to regularly pursue delinquent tax collection through cryptocurrency seizures to strongly collect large delinquent amounts.”

As cryptocurrency seizures prove effective in collecting delinquent taxes, it is expected that more local governments will begin checking and seizing cryptocurrency holdings of local tax delinquents.

Currently, Sejong City is also in the process of seizing virtual assets concealed by local tax delinquents. The city explained that this procedure follows a recent Supreme Court ruling recognizing cryptocurrency as intangible assets subject to confiscation and amendments to the Act on Reporting and Using Specified Financial Transaction Information, which enables identity verification through cryptocurrency exchanges.

Earlier, on the 14th, the city requested the cryptocurrency holding status of 472 delinquents with arrears exceeding 5 million KRW from domestic cryptocurrency exchanges including Bithumb Korea, Dunamu, Coinone, and Korbit.

Furthermore, the city plans to proceed with seizures immediately upon receiving the status from exchanges and cover delinquent amounts through the sale of cryptocurrency if delinquents fail to pay local taxes.

A city official stated, “We will not tolerate increasingly sophisticated asset concealment by delinquents. The city will investigate delinquents’ cryptocurrency holdings through exchanges and actively pursue the collection of delinquent taxes.”

This content was produced with the assistance of AI translation services.