In the wake of allegations against lawmaker Kim Nam-kuk, South Korean authorities conducted raids on the offices of two local cryptocurrency exchanges, Upbit and Bithumb. The investigations revolve around Kim’s digital assets and transactions.
Prosecutors from the Seoul Southern District Prosecutors Office seized transaction records and other relevant materials during the raids. Kim is reported to have operated his digital asset wallets on Upbit and Bithumb.
The raids followed Kim’s resignation from his political party on May 14, prompted by accusations of engaging in suspicious cryptocurrency dealings while being involved in digital asset legislation in May and November 2022.
In a Facebook post, Kim stated that he did not want to burden his fellow party members with the controversy surrounding his crypto activities. He also claimed that media reports contained false facts and expressed his intention to reveal the truth.
Reports suggest that Kim liquidated over $4 million in cryptocurrency prior to the enforcement of the Financial Action Task Force’s “Travel Rule.” He allegedly supported a bill to defer the capital gains tax on cryptocurrencies from 2023 to 2025.
While Kim claimed to have transferred his digital assets to another exchange rather than cashing them out, he argued that he was not obligated to report such actions.
Bithumb, one of the exchanges linked to Kim’s funds, has faced scrutiny from local regulators in recent months. The exchange’s major shareholder executive was found dead after being accused of embezzlement and stock price manipulation. Subsequently, Bithumb underwent regulatory investigation and had its offices raided.
These events in South Korea occur amidst a broader crackdown on local cryptocurrency activities. The Bank of Korea has been granted authority to investigate cryptocurrency-related businesses, and new regulations propose stringent sentencing recommendations and grant the Financial Services Commission powers to investigate and supervise digital asset-related activities.