Kim Nam-guk Also Under Police Investigation... What Are the 3 Key Points of the Coin Investigation?

Police Launch Investigation on Suspected Violations of the Act on Real Name Financial Transactions
Prosecutors Requested Warrants for Cryptocurrency Wallets Last Year
Probe into Possible Bribery, Insider Information Use, and Political Fund Inflow Underway

Kim Nam-guk, an independent lawmaker who left the Democratic Party of Korea, is also facing a police investigation regarding allegations of 'cryptocurrency investment.' On the 15th, according to the police, the Seoul Metropolitan Police Agency assigned the case of allegations against Kim's cryptocurrency investments to the Yeongdeungpo Police Station in Seoul. The civic group Committee for the Protection of the Livelihood of Ordinary People (Seominwi) filed a complaint against Kim on the 9th with the Seoul Metropolitan Police Agency, accusing him of violating the Real Name Financial Transaction Act, defamation, and fraud. Seominwi stated, "Although he explained that he transferred the withdrawn cryptocurrency without cashing it out to invest, this constitutes a violation of the Real Name Financial Transaction Act," and added, "We are appalled by his brazenness in deceiving the public and not even recognizing the criminal facts." The police are expected to closely examine the allegations against Kim, including the use of insider information, whether there was any quid pro quo, and the use of political funds, separately from the prosecution, which is already investigating Kim.

Independent lawmaker Kim Nam-guk is arriving at his office in the National Assembly on the morning of the 14th. After arriving, he announced his departure from the Democratic Party through Facebook.
[Image source=Yonhap News]

Whether There Was Quid Pro Quo in Cryptocurrency

Currently, discrepancies between Kim's explanations and his asset details have raised suspicions that the cryptocurrency investments were not made with his own money but possibly received through lobbying. Kim explained in a statement that he sold LG Display stocks and used about 1 billion KRW for cryptocurrency investments. However, as of the end of 2021, Kim held 1.11581 billion KRW in deposits after selling LG Display stocks. The source of the over 1 billion KRW invested in cryptocurrency remains unclear. Since Seominwi requested an investigation, stating that the opaque flow of funds constitutes a violation of the Real Name Financial Transaction Act, the police are expected to scrutinize Kim's financial records.

Kim's involvement in proposing bills favorable to the cryptocurrency and gaming industries has also become a subject of controversy. At the time of participating in the related bill proposals, Kim held cryptocurrency. He was a co-sponsor of the 'Income Tax Act Amendment' proposed by fellow party member Roh Woong-rae. The bill included provisions to postpone taxation on cryptocurrency until 2025. Additionally, at the end of December 2021, Kim participated in the amendment to the Game Industry Promotion Act proposed by fellow party member Jeon Yong-gi. The amendment defined 'game money' as cryptocurrency used within games and was reportedly favorable to play-to-earn (P2E) companies.

Academics have raised suspicions that the cryptocurrency and gaming industries actively lobbied the National Assembly. The Korea Game Society stated in a press release, "There were rampant rumors that P2E companies lobbied the National Assembly," and added, "Not only lawmakers but also their aides should be thoroughly investigated." However, Kim maintains that he has no connection to these industries. On the 12th, Kim said, "The only thing that came into my cryptocurrency wallet was interest from deposited cryptocurrency," and added, "No money fell from the sky, and if I disclose everything, it will all become transparent."

Use of Insider Information

View of Wemade Headquarters in Seongnam-si, Gyeonggi-do [Image source=Yonhap News]

The most suspicious point about Kim is whether he used insider information. He invested by timing the low points of highly volatile cryptocurrencies like a professional investor. It was revealed that he held 'Wemix,' a cryptocurrency issued by Wemade, from October 2021. At that time, Wemix was only listed on the domestic cryptocurrency exchange Bithumb, but on January 11 of last year, it succeeded in being listed on Upbit, which accounts for over 80% of domestic circulation. On the day of the listing, Wemix's price nearly doubled compared to the previous day.

There is also evidence that Kim invested in 'Mavrex,' a cryptocurrency issued by Netmarble. From April 21 to May 3 of last year, when Mavrex was listed on Bithumb, about 19,000 Mavrex flowed into Kim's wallet. Mavrex, which was priced in the 40,000 KRW range, surged to 65,000 KRW following the Bithumb listing. The value of Mavrex held by Kim was approximately 970 million KRW based on the market price at that time. However, Wemade and Netmarble have stated that they never provided Kim with any prior information.

Whether Political Funds Were Involved

The prosecution is expected to examine Kim's political funds through financial tracking. In July of last year, the Financial Intelligence Unit (FIU) notified the prosecution of Kim's suspicious cryptocurrency transactions and provided related data. Subsequently, the prosecution registered Kim as a suspect for violating the Political Funds Act and requested a search warrant for his wallet. However, the court dismissed the warrant, stating that merely holding a large amount of cryptocurrency does not necessarily imply criminal charges.

Nevertheless, investigative agencies and political circles suspect these allegations. On the 9th, a representative from the Seoul Southern District Prosecutors' Office said regarding Kim's allegations, "Would the FIU notify investigative agencies of (Kim's suspicious transactions) if it were completely unrelated to a crime?" Yoon Jae-ok, floor leader of the People Power Party, said, "Although institutional problems have been pointed out, every time Kim explains, lies are revealed," and added, "There are also lobbying allegations that may involve the Democratic Party of Korea, so it is a priority to uncover the truth through investigation."

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