According to local media reports, South Korean authorities have raided the offices of some crypto exchanges as part of the investigation against the politician Kim Nam-kuk. Reportedly, South Korean prosecutors have reportedly raided the offices of the two leading cryptocurrency exchanges in the country – Upbit and Bithumb.
On May 8, South Korea’s financial regulator, Financial Services Commission (FSC), reported a list of crypto transactions executed by Kim to local prosecutors which sparked domestic outrage over a potential conflict of interest.
The lawmaker has been accused of liquidating over $4 million worth of crypto assets before the country started to enforce the “Travel Rule” from the Financial Action Task Force in March 2023. Notably, the politician has come under immense public scrutiny after several reports indicated he acquired 800,000 Wemix tokens by bypassing necessary regulations.
As per the ongoing investigation, he transferred the coins from Bithumb to Upbit last year, and the authorities suggested the platforms could have been involved somehow. Hence, they went on to raid the exchange’s headquarters in the capital city, Seoul.
Recently, the Democratic Party urged him to sell his 800,000 Wemix coins following accusations that he could have used insider information to accumulate them a few years ago. The politician allegedly withdrew the assets at the beginning of 2022: several months before the enforcement of legislation that requires crypto entities to report personal information when transferring over $758.
Notably, the lawmaker has been an integral part of the Korean legislature and was also part of the team that proposed a delay of income taxation on digital assets in the nation. Following the investigation, Kim announced his exit from the party and said he would fulfill the DP’s requirement and sell the holdings, currently worth approximately $660,000.
I received the recommendation from the party to sell my crypto assets. I will faithfully implement the recommendation. I will transparently disclose data to the investigation team and undergo the inquiry faithfully.
While Wu Blockchain believes that Kim’s transaction of 800,000 Wemix coins from Bithumb to Upbit in 2022, could have sparked the investigation against the exchanges, Upbit believed it to be “an improper transaction” and reported it to the government at the time.
However, this is not the only investigation on Bithumb this year. In January, the National Tax Service (NTS) officials raided the exchange’s headquarters in Gangnam-gu, Seoul, the capital city, to investigate if the firm complied with tax regulations on cryptocurrency activity.
Soon after that, the South Korean prosecutors again raided the Bithumb offices to investigate the allegations of price manipulation and fraudulent transactions in local tokens. Sources suggest that the local tokens assumed to be involved in the incident are GoMoney2 and Pixel Coin. Additionally, the executives have also been charged with allegations of embezzlement and stock price manipulation. However, the authorities stated:
This is a search and seizure to secure the transaction details of a specific coin, and it has nothing to do with Bithumb.
The South Korean authorities have kept their guard up in recent times and are speedily progressing toward regulating the sector. South Korea’s central bank has been constantly ramping up its efforts to oversee crypto in the country. On April 24, the Bank of Korea was allowed to investigate crypto-related businesses. With this, the bank can request transaction data from local crypto operators.
Simultaneously, alarmed by the happenings in the crypto sector, lawmakers are intending to have regulation as fast as possible. In March, the South Korean parliament commenced its discussion for robust and wide-ranging crypto regulation prioritizing investor protection and the issuance and disclosure of assets.