S. Korean Lawmaker Investigated Over Crypto Transactions
Local reports on Monday revealed that a top lawmaker in South Korea is being probed over claims that he held and withdrew around 800,000 WEMIX tokens in 2022, which he did not disclose to the public. The lawmaker has not yet been proven guilty, but the investigation will likely have severe implications for asset disclosure rules in South Korea.
Top S. Korean Lawmaker Secretly Held 800K WEMIX Tokens in 2022
According to Yonhap News, South Korean lawmaker Kim Nam-kuk was investigated by prosecutors last year over allegations he had held 6 billion won (US$4.5 million) in undisclosed crypto funds. The revelations resulted in domestic outrage due to a potential conflict of interest.
Yonhap reports that Kim, a member of S. Korea’s National Assembly, held around 800,000 WEMIX tokens in his digital wallet from January to February 2022. The holdings, worth roughly 6 billion won then, were then reported to the Financial Services Commission’s Financial Intelligence Unit (FIU). WEMIX was delisted last year due to inaccurate reports on the coin’s circulation data.
Kim reportedly pulled out all crypto holdings from his digital wallet before the S. Korean authorities implemented the travel rule in March that requires digital asset service providers and market operators to disclose the identities of investors who traded more than 1 million won. The lawmaker denied allegations that he cashed out his tokens and broke the country’s laws.
But reports suggest that Kim’s significant crypto holdings were not reported to the public through regular asset disclosure that requires top government officials and policymakers to disclose their financial and other assets. However, according to Yonhap, cryptocurrencies are not subject to such disclosure in South Korea.
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A Loophole in Korea’s Asset Disclosure Regulations
While accusations against him are severe, the investigation into Kim’s crypto holdings remains ongoing. In any case, the probe is likely to have significant implications, particularly regarding the disclosure rules of public officials.
In other words, Kim’s case highlights a broader loophole in South Korea’s disclosure rules. One of the ways to address this is by making it mandatory for public officials to disclose their crypto holdings when reporting financial and other assets.
Last month, a bill aiming to regulate cryptocurrencies in South Korea passed the first review phase in National Assembly. The legislation, proposed following a series of high-profile crypto collapses, seeks to force crypto service providers to hold their assets separately from user funds and deposits, provide proper insurance, and maintain enough reserves to avoid a fallout in case of a system failure or a significant hack.
Do you think the current investigation will change S. Korea’s disclosure rules? Let us know in the comments below.