The National Tax Service (NTS) of South Korea began a tax investigation of its major digital-currency exchanges that trade bitcoin, such as Bithumb and Coinone, on January 10.
Coinone said, “The NTS took our data on financial transactions and related accounting books on the 10th and it seems to start an investigation. I believe that the three largest exchanges are the subject to investigation.”
The investigation is to get information about traders of digital currencies like bitcoin and suspected tax evasions of the exchanges. Under the current law, virtual currencies are not a property liable for taxation and the NTS doesn’t have information about their financial transactions. This is why market watchers say that the NTS is conducting the investigation to secure the current data on digital currency financial transactions and information about investors. The industry also says that virtual currencies are being used for money laundering and gift and inheritance tax evasion. The government also needs to grasp a source of taxation in order to impose taxes in the future.
The NTS decided to come forward as the frenzy of speculation in cryptocurrency-related investments hasn’t quiet down yet despite a string of the financial authorities’ interventions and police investigation. Financial Services Commission (FSC) Chairman Choi Jong-ku announced on the 8th that he is carrying out a special inspection on six local banks that offer virtual currency accounts to cryptocurrency exchanges. However, the price of bitcoin traded on Bithumb fell for a while and then rose again on the same day. When the government held a vice ministerial meeting and announced its special measures to eradicate cryptocurrency speculation on December 28 last year, the price of digital currencies rebounded back after the fall by 10 percent. Bitcoin prices once surpassed 25 million won (US$23,364). Recently, the police has begun an investigation on Coinone on charges of illegal trading on margin.
Meanwhile, domestic cryptocurrency platform Youbit is to go through the sale procedure, though it announced to shut down when it lost 17 percent of its total assets in the cyber-attack on December 19 last year. An official from Youbit said, “We will proceed the sale with a company that notified us of its intention to acquire in earnest. Since the stake of existing major shareholders will be perished without any strings attached, we are not selling the company to make profits.”