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South Korean Lawmaker Accused of Conflict of Interest in Cryptocurrency Transactions

Financial Services Commission Alerts Prosecutor's Office of Suspicious Transactions Involving WEMIX Tokens

South Korean lawmaker Rep. Kim Nam-kuk. Facebook

Tue, 09 May 2023, 14:37 pm UTC

South Korean lawmaker Rep. Kim Nam-kuk from the opposition Democratic Party of Korea is facing accusations of potential conflict of interest after reportedly making a series of cryptocurrency transactions.

The Financial Services Commission's Financial Intelligence Unit (FIU) was alerted to the withdrawals of 800,000 WEMIX tokens by Rep. Kim from late February to early March 2022.

The lawmaker's WEMIX holdings were valued at $4.5 million between January and February 2022. The FIU has since reported the transactions to the prosecutor's office, classifying them as suspicious.

South Korea had implemented the Financial Action Task Force's (FATF) travel rule on March 25, 2022, which requires exchanges to collect personal data on transactions and report them to authorities when they exceed a certain threshold.

However, there is no reporting requirement for virtual assets in South Korea's Public Service Ethics Act.

WEMIX, the cryptocurrency in question, was delisted from major exchanges in South Korea last year for allegedly reporting inaccurate circulation supply figures.

Its issuing company, WeMade, unsuccessfully challenged the delisting in court.

Rep. Kim co-sponsored an amendment to the Income Tax Act in July 2021, which included a provision to defer taxation on virtual assets.

However, South Korea has postponed plans to tax income from crypto as well as income from the "transfer or lending" of virtual assets to 2025.

Rep. Kim has denied any wrongdoing, stating that he did not cash out his tokens and did not violate any laws.

Nonetheless, the transactions have sparked domestic outrage, and the prosecutor's office will investigate further.

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