Allegations of Conflicts of Interest Over Virtual Currency
South Korean prosecutors raided local cryptocurrency exchanges Upbit and Bithumb on the 15th. It is related to the suspicions surrounding National Assembly member Kim Nam-gook and virtual currency.
The investigative team of the Seoul Southern District Public Prosecutor’s Office seized transaction records and other materials from both exchanges.
background of the investigation
By way of background, the South Korean Financial Information Authority is investigating Rep. Kim for selling approximately 6.1 billion yen (approximately 6 billion won) in cryptocurrencies before South Korea introduced travel rules in March 2022.
What are Travel Rules?
Rules for international wire transfers to prevent money laundering advocated by FATF (Financial Action Task Force). Crypto Asset Service Providers (VASPs) are required to collect and exchange information on senders and recipients during transactions and to ensure the accuracy of that information. International Know Your Customer (KYC) rules will be applied to cryptocurrency transfers between eligible VASPs.
Rep. Kim claimed that the assets were not converted to cash and were transferred to another exchange. He also said there was no need to report such activity. Authorities are believed to have launched an investigation in this regard.
Rep. Kim also explained that all cryptocurrency transactions are conducted through real-name accounts, and transaction records can be clearly disclosed.
The legislator has created an image of a common lawmaker who stands by the poor, and it seems that this image and holding a huge amount of virtual currency seem to contradict each other, which has also invited criticism.
He also joined other lawmakers in proposing a bill in 2021 that would delay the taxation of cryptocurrency profits. Some argue that this was a conflict of interest for Rep. Kim, who owns cryptocurrencies.
connection: South Korea Postpones Enforcement of Virtual Currency Tax to 2025
For example, Daegu Metropolitan City Mayor Hong Joon-pyo criticized Rep. Kim as follows.
This is serious moral hazard. It seems that he was trying to get rich quick with cryptocurrency trading. He should have quit his job as an MP and focused instead on speculative trading.
Additionally, Rep. Kim was part of a proposal to delay the taxation of cryptocurrencies. This is considered an abuse of legislative power to protect private property.
Rep. Kim resigned from the Minjoo Party on the 14th, saying he didn’t want to burden his colleagues with allegations over cryptocurrency trading. He also said that there were factual errors in the media reports and that he would “reveal the truth”.
Discuss comprehensive regulatory proposals
In South Korea, the ruling and opposition parties are discussing a comprehensive cryptocurrency regulation proposal.
The focus is on consumer protection and legal compliance, requiring exchanges to segregate client assets, purchase insurance against non-market related losses, and maintain reserves. and so on.
A member of the ruling People’s Power Party digital asset special committee has suggested that the bill could be enacted by the end of 2023.
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