South Korean City Says It Will Liquidate Tax Dodgers’ Crypto

The city of Paju, South Korea, has taken a strong stance against tax evaders by threatening to liquidate their cryptocurrency holdings unless they settle their unpaid taxes by the end of November 2024. The local government has warned 17 residents about the potential liquidation of their crypto assets, which amount to a combined total of 124 million won (approximately $88,900).

Paju’s Ultimatum to Tax Evaders

According to Yonhap News, Paju officials have already frozen crypto wallets containing digital coins worth $35,800 from these residents. The authorities have sent formal notices to these individuals, stating that if the taxes are not paid by the deadline, the city will transfer the crypto assets into its own wallet and sell them off to recover the owed amount. A city official emphasized the message behind this move, saying it demonstrates the government’s ability to track and seize assets, no matter how they are concealed, sending a strong warning to taxpayers who might try to evade their obligations.

Efforts to Address Crypto Tax Evasion

Paju’s decision to sell off seized crypto is a first for the city, though local authorities have previously confiscated digital assets from tax dodgers. Officials explained that the rapid adoption of cryptocurrencies has raised concerns about their use for hiding or moving assets to avoid taxes. This marks a significant step in South Korea’s nationwide crackdown on tax evasion involving crypto.

Paju is not alone in this effort. South Korean tax authorities have been increasing their use of sophisticated software tools to track down individuals using cryptocurrencies to conceal their assets. Additionally, the country’s laws allow tax authorities to compel crypto exchanges to provide information about users’ wallets, making it harder for evaders to hide their holdings.

Broader National Crackdown on Tax Evasion

This move is part of a larger trend in South Korea, where several local governments have ramped up efforts to crack down on crypto-related tax evasion in recent years. In June 2024, officials in Jeonbuk (North Jeolla) province confiscated $138,000 worth of crypto from tax dodgers, and in August, the Seoul district of Gangnam, known for housing many of the country’s top crypto companies, announced its own crackdown.

The South Korean government’s regulatory approach includes measures such as banning anonymous cryptocurrency trading and requiring all crypto wallets to be linked to personal identification numbers and domestic bank accounts. These regulations are designed to ensure that crypto transactions remain traceable and that tax evaders are caught.

The Growing Focus on Crypto Tax Enforcement

As crypto adoption continues to grow, South Korean authorities are increasingly focused on ensuring that the industry complies with taxation laws. The ability to seize and liquidate crypto assets is seen as an important tool in tackling financial crimes, as it provides the government with a direct way to reclaim funds from evaders.

Paju’s move to sell off crypto assets seized from tax dodgers highlights the seriousness with which the city and broader national government are taking the issue. This development may signal even more aggressive measures in the future to curb the misuse of cryptocurrencies in tax evasion and other illicit activities.