South Korea Cracks Down on Crypto Tax Evaders: New Investigations and Seizures Underway

• Gwanak district targets 325 individuals owing $714,000 in unpaid taxes, requesting data from major exchanges.
• South Korea has seized crypto assets since 2022 to recover unpaid taxes, with government sales of seized funds.
• Despite delays in crypto tax reforms, the country’s crypto market grew 27% in 2024, reaching 55.3 trillion won.

South Korea’s government is boosting its efforts to fight tax evasion in the crypto space. Authorities are cracking down on individuals hiding wealth in digital assets. The Gwanak district in Seoul recently announced a new investigation targeting 325 individuals owing $714,000 in unpaid taxes. 

Seizing Crypto Assets for Tax Recovery

The South Korean government has adopted powerful measures to collect tax payments related to cryptocurrency assets. When the Supreme Court issued its 2018 decision, it declared that Bitcoin and other electronic assets had property status. 

The Supreme Court’s permission provided the government with the power to confiscate digital currency that belonged to taxpayers who had failed to pay their taxes. In 2022 the government approved legislation that authorized taxation authorities to confiscate digital assets then put them up for sale to obtain unpaid tax payments.

The Gwanak investigation follows similar initiatives across the country, including in smaller cities like Gwacheon. If individuals do not pay their taxes, authorities can freeze their crypto wallets and sell their assets to recover the owed amount.

The South Korean government works closely with major crypto exchanges to track down those evading taxes. By requesting data from these exchanges, authorities aim to identify individuals hiding wealth in cryptocurrency.

What Happens to Seized Cryptocurrency?

Once seized, cryptocurrency assets are subject to government sale if individuals fail to settle their tax debts. The funds from these sales are used to support public finances and local government expenses. Authorities hope these actions will serve as a deterrent to tax evaders, ensuring compliance with the law.

Despite these measures, the People’s Power Party in South Korea has proposed delaying crypto tax reforms until 2027. The move raises concerns among investors, with some fearing it may encourage illicit activities. 
Meanwhile, South Korea’s crypto market has grown by 27% in 2024, reaching 55.3 trillion won by June. Daily trading volumes surged to 20 trillion won, contrasting with struggles in the stock market.