Gyeonggi Province Recovers Millions in Crypto from Tax Evaders

The South Korean province of Gyeonggi has successfully collected over $4.6 million in unpaid taxes from individuals who hid their wealth in cryptocurrency. The province used a new electronic management system that can track down crypto assets in just 15 days.

How the system works

The system works by inputting a list of delinquent taxpayers into the system. The system then uses resident registration numbers to find their mobile phone numbers, which are often linked to their crypto exchange accounts. This way, the system can identify and seize their crypto assets in a matter of days.

Previously, the process of finding and confiscating crypto assets from tax evaders took up to six months per case. The new system has significantly improved the efficiency and effectiveness of tax collection in the province.

The results of the crackdown

According to local media outlet Midjourney, the system has discovered 5,910 tax evaders who held virtual assets like Bitcoin, owing a combined $3.5 million. Out of these, 2,300 individuals have already paid back $4.6 million in taxes, including penalties and interest.

The province has also strengthened its cooperation with crypto exchanges and is exploring administrative actions against those who resist data inquiries. The local government has the power to request information from crypto exchanges under the law.

The implications for the crypto industry

The crackdown on crypto tax evaders is part of the broader efforts by the South Korean government to regulate the crypto industry and prevent money laundering, fraud, and tax evasion. The country has introduced a mandatory reporting requirement for crypto holders this year, as well as a 20% tax on crypto gains starting from 2025.

The country is also planning to tax airdrops, which are free distributions of crypto tokens to users. However, some lawmakers have proposed to postpone the taxation of crypto gains for two years, citing the need to support the development of the industry and the lack of clear legal definitions.

The crypto industry in South Korea is one of the largest and most active in the world, with millions of users and hundreds of exchanges. The country is also home to some of the leading crypto projects, such as ICON, Terra, and Klaytn.