Tax Agency Finds South Korea's Biggest Cryptocurrency Exchange Not Guilty of Tax Evasion

Francisco Memoria
  • South Korean authorities conducted a three-month-long investigation into Bithumb's transaction records to evaluate its tax compliance.
  • The results saw Bithumb isn't guilty of tax evasion, but that it still needs to pay $28 million.

Bithumb, along with fellow exchange UPbit, was earlier this year hit with an investigation that saw various government agencies probe its operations, focusing on transaction histories to evaluate tax compliance. Recent reports suggest it was found not guilty of tax evasion.

According to local news outlet Yonhap, the National Tax Service (NTS), the Financial Services Commission (FSC) and the Korea Financial Intelligence Unit (KFIU), all started probing Bithumb, one of the country’s largest cryptocurrency exchanges, after investors raised concerns.

Earlier this year, the government raided the headquarters of UPbit in Seoul for allegedly deceiving investors, and almost immediately after turned to Bithumb over potential malpractice and suspicious business activities.

Specifically, the cryptocurrency exchange saw its profits rise by a factor of 171 last year, a figure that was released to the public because of its parent company BTCKorea, which is publicly owned. Interestingly, the surge could partly be attributed to the cryptocurrency space’s rise last year, which saw most cryptocurrencies hit new all-time highs.

The regulators’ investigation, which lasted for about three months, found that Bithumb’s revenues came from transaction and trading fees. An NTS representative stated:

"NTS initiated several investigations into Bithumb between 2014 and 2017, and over the past four years, Bithumb has continuously paid all of the taxes imposed to the company without any conflict with the NTS.”

NTS representative

Notably Bithumb wasn’t completely cleared, as according to the local news outlet the cryptocurrency exchange is now facing a massive bill of around 30 billion won ($28 million) for back taxes. The representative added:

“While a $28 million tax was imposed onto Bithumb, no evidence [of] tax evasion and illicit activities was shown and the NTS closed the investigation into Bithumb officially, clearing the company.”

NTS representative

In cooperation with South Korean authorities, Bithumb banned accounts from 11 countries as part of its anti-money laundering (AML) efforts. These countries were selected by the Financial Action Task Force for failure to comply with AML guidelines.

South Korean regulators have been keeping a close eye on the crypto space, as earlier this year they outlawed anonymous trading. Coinone, another local cryptocurrency exchange, is set to face charges for running an “illegal gambling operation” because it offers users margin

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Indian Tech Body Form Blockchain Committee With Reps From Zebpay, Microsoft and IBM

Francisco Memoria

The Internet and Mobile Association of India (IAMAI) has recently formed a blockchain committee to develop the new technology’s ecosystem in the country, in a move that counts on representatives from large, influential organizations.

According to Indian daily newspaper the Economic Times the IAMAI, whose goal is to “expand and enhance” India’s online and mobile sector, is looking to get the government and other organization in the country to look into distributed ledger technology (DLT).

One of the committee’s main goals, according to the report, is to advance job creation for the fintech industry. The committee will be chaired by the digital chief at Mahindra Finance, Tina Singh. She was quoted as saying:

Blockchain is undeniably the technology of the future, slated to bring decentralization and trust and accountability into multiple areas of business. However, in order to be more effective and enter the mainstream, blockchain technology needs the intervention of government bodies, regulatory authorities and corporates.

Participants in the committee notably include representatives from organizations like Mastercard, Microsoft, IBM, India’s largest private bank HDFC, and major cryptocurrency exchange Zebpay.

Zebpay has, as covered, been forced to shut down over a banking freeze in the country. The exchange was responsible for playing a critical role in the cryptocurrency industry in India, as many entered the crypto space through its platform.

At the time, Zebpay justified the move stating:

The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.

The exchange’s “curb on bank accounts” came after India’s central bank, the Reserve Bank of India (RBI), issued a banking embargo on cryptocurrency-related businesses in April of this year. It prohibited financial institutions to offer banking services to firms related to the industry.

The exchange still offers users in the country wallet services. Some of its users who decided to keep on trading moved to BitBns, an exchange that offered to pay transaction fees for Zebpay’s users. BitBns itself has been accused of inflating its trading volumes.

Another exchange, Unocoin, has reportedly found a loophole that allows it to continue operating in the country, using crypto ATMs. Despite the RBI’s clampdown on cryptocurrencies, the financial institution is exploring the “feasibility” of issuing its own crypto.