Tax officials in Jeju City, the capital of the South Korean island province of Jeju, have reportedly started the process of freezing and seizing the crypto of those it believes to be dodging tax requirements.
The move is part of a broader operation that saw authorities investigate 2,962 individuals who are in arrears for a combined total of 19.7 billion won ($14.2 million), to confirm if they had crypto holdings which could be seized to settle the outstanding balance owed, according to a report on Saturday by local media outlet Newsis.
During the investigation, tax officials combed through data from major South Korean crypto exchanges Bithumb, Dunamu’s Upbit, Coinone, and Korbit — finding 49 of the alleged tax dodgers had combined crypto holdings valued at over 230 million won ($166,269).
Jeju City’s Tax Division has designated the exchanges’ third-party debtors to start seizing and securing the coins to help pay some of the debt owed by the alleged tax evaders.
Jeju is South Korea’s largest island and a tourist hotspot with a history of crypto initiatives. Source: J. Patrick Fischer
Tax Division used AI to analyze crypto transaction data
Jeju is South Korea’s largest island and a tourist hotspot. It has a history with crypto initiatives, including launching non-fungible token tourist cards and a blockchain-based COVID-19 contact tracing app in 2021.
Jeju City Tax Division Chief, Hwang Tae-hoon, said the city will “continue to strengthen our response to tax delinquency using new assets such as virtual assets to thoroughly uncover hidden tax sources,” according to Newsis.
He added that the Tax Division will also continue to “collect high-value tax delinquents through AI-based information analysis, striving to secure substantial tax revenue and foster a culture of honest tax payment.”
Crypto exchange users in South Korea have surpassed 16 million, or more than 30% of the country’s population, who flocked to the crypto market after it saw a boost from US President Donald Trump’s election win in November.
Crypto of alleged delinquents on the chopping block
The South Korean government enacted laws allowing regulators to seize cryptocurrencies like Bitcoin (BTC) from tax delinquents in 2021.
Related: Australian court ruling could lead to $640M in Bitcoin tax refunds
Authorities in the South Korean city of Paju, northeast of the capital Seoul, announced plans to seize and sell the crypto holdings of citizens with unpaid taxes in November last year.
Meanwhile, in 2022 and 2021 combined, the South Korean government confiscated as much as 260 billion Korean won ($180 million) worth of cryptocurrencies from tax evaders.
In 2021, the city administration of Seoul, also seized crypto worth 25 billion won ($22 million) from individuals and company heads who were allegedly tax delinquents.
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