South Korean prosecutors have raided the offices of two local cryptocurrency exchanges amid an investigation surrounding lawmaker Kim Nam-guk's digital assets.
A team of prosecutors from Seoul's Southern District Prosecutor's Office raided cryptocurrency exchanges Upbit and Bithumb to obtain transaction records and other materials, South Korea's Yonhap News Agency reported.
Kim is said to operate his digital asset wallets on Upbit and Bithumb. Authorities launched the raid immediately after Kim resigned from his party on May 14. His departure is related to multiple allegations against him over suspicious cryptocurrency transactions dur ing his work on digital asset legislation in May and November 2022.
According to the former lawmaker's Facebook post, he doesn't want to “burden” his party members with the controversy surrounding his cryptocurrency dealings. In the same post, he also said he would "expose the truth" after accusing the media of "false facts". Kim liquidated more than $4 million in cryptocurrencies before the Financial Action Task Force enforced the “travel rule,” according to a report in The Korea Times on May 8. Kim is said to support a bill that would delay the 20 percent capital gain tax on cryptocurrencies from 2023 to 2025.
Kim reportedly claimed that instead of cashing out his digital assets, he transferred them to another exchange. The lawmaker said he was under no obligation to report such activity. The South Korean politician is said to own around 800,000 Wemix coins ($4. 5 million) in 2021 , according to Yonhap News Agency. Bithumb, one of the exchanges where Kim allegedly held his funds, has been under scrutiny from local regulators in recent months.
In December 2022, an executive at the exchange's largest shareholder was found dead shortly after being accused of embezzlement and stock price manipulation. Less than a month later, Bithumb came under investigation by regulators, whose offices were raided on Jan. 10. On Feb. 2, the exchange's owner was arrested by South Korean authorities on embezzlement charges and warrants, which included additional charges of negligence, market manipulation, and fraudulent trading. All of these developments in South Korea come as the country's author ities have been cracking down on local cryptocurrencies activity.
On April 24, South Korea’s central bank, the Bank of Korea, was given permission to launch an investigation into operators of cryptocurrency-related businesses. As part of this new power, banks will be able to request access to encrypted transaction data from exchanges operating in the country.
Two days later, lawmakers passed an initial review of proposed cryptocurrency regulation. The new rules include relatively harsh sentencing recommendations and give the Financial Services Commission powers to investigate and monitor any activity related to “digital assets.”
