South Korea’s authorities raid Bithumb exchange

abdelaziz Fathi

Bithumb, one of South Korea’s big four exchanges — alongside Coinone, Korbit, and Upbit — was raided by police and tax agencies this week for alleged tax evasion, Yonhap News reported.

Bithumb

The country’s tax inspectors visited the exchange’s headquarters in Seoul, as part of a push to increase taxation and compliance, the National Tax Service (NTS) said. The current investigation extends to domestic and international transactions of Bithumb Korea, Bithumb Holdings and affiliates.

Although no specific taxation standards for crypto assets have been put in place yet, the finance ministry considers re-classifying returns made on cryptocurrencies as a type of ‘other income’. This places crypto profits in the same category as those earned from lotteries, which has a 20 percent tax rate.

Despite the high tax tag levied on ‘other income’, it remains better than being taxed as a form of capital gains as it is currently treated, which calls rates of up to 42 percent.

Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.

Upon completing real-name verification and partnering with a local bank, digital assets platforms are required to acquire a license from the country’s Financial Intelligence Unit (FIU). This is a unit of the Financial Services Commission (FSC), the country’s top financial regulator.

Bithumb was in the news recently after its former chair, Lee Jung-Hoon, was acquitted on charges of defrauding the business of $70 million during the acquisition of the South Korean crypto exchange.

South Korean prosecutors were reportedly seeking an eight-year jail sentence for  Lee Jung-hoon, the de-facto owner of the country’s second-largest crypto exchange, in the ongoing $100 million fraud case.

The single-largest shareholder of Bithumb’s parent company was on trial for charges of fraud after BK Group dropped its plans to acquire the crypto exchange.

According to the prosecution, Lee allegedly took $100 million from Kim Byung-gun, the founder of a line of cosmetic surgery clinics, to buy out a 50% stake in Bithumb. The money was paid as a “contract fee” after reaching a deal to manage the exchange jointly following the acquisition alongside the promise to list a new token at the exchange.

Yet, the Bithumb Coin (BXA), which was issued by BK Group-linked Blockchain Exchange Alliance, was never listed and the consortium didn’t take over Bithumb as it failed to pay the balance. In 2019, Lee accused his ex-partner in Singaporean court of selling BXA tokens on his behalf. A year later, Kim filed a complaint against Lee in a Korean court.

 

Read this next

Industry News

Research market in dire straits as SEC’s ‘no-action’ letter on MiFID II lapses in June – survey

“Of all the regulatory news that has hit the research market in the last few months, this is the one change that will fundamentally impact what fund managers can access and pay for in future.”

Executive Moves

Wombat appoints ex-abrdn Richard Charnock as UK platform turns to Europe

Launched in 2019, Wombat provides a dedicated mobile investing platform – available on both iOS and Android – offering users both range and choice.

Institutional FX

Broadridge integrates Point Focal’s pre and post-market reports

“Point Focal provides a unique lens on the market which will help add alpha to the trading process and these new insights will rapidly improve performance while mitigating execution risk and simplify trading.”

Technology

XCritical integrates with Brokeree Solutions, allowing its clients to launch copy trading 

The forex software provider – XCritical, has integrated Social Trading by Brokeree Solutions into their CRM system.

Industry News

HKEX partners with Saudi exchange for cross listings, ESG, Fintech

“The Kingdom of Saudi Arabia, and the broader Middle Eastern region, are one of the world’s most dynamic and exciting economic and innovation hubs and also home to some of the fastest growing investor groups in the world. Hong Kong and HKEX’s markets offer significant opportunities for international investors and corporates, including unrivalled connectivity to the Mainland Chinese markets through our unique Connect programmes. This agreement signals the beginning of even greater collaboration between our companies and our home markets, and we look forward to exploring many future areas of cooperation.”

Executive Moves

CMC Markets Connect relocates APAC team led by Peter Foster to Singapore

“Singapore is a vibrant city and is now undoubtedly seen as Asia’s leading financial hub. The decision to bolster the CMC Markets Connect team here will help us cement the company’s position as a leading provider of multi asset liquidity and comprehensive trading solutions across the region.”

Retail FX

Italian watchdog red flags Olympus Brokers, UnicoFX and Allfina Group

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

XTB revenues hits zł1.45 billion in 2022, Q4 earnings disappoint

Poland-based Forex and CFDs broker, XTB has reported its final results for Q4 of 2022 and the full fiscal year ending on December 31, 2022, showing one of its most successful corporate years.

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

<