Authorities in Paju, a city in South Korea’s Gyeonggi Province, have announced a crackdown on tax delinquents using cryptocurrency to conceal assets. Officials plan to seize and sell the digital holdings of residents with unpaid taxes.
17 Tax Evaders Face Crypto Seizures
On November 18, local media outlet Yonhap News reported that Paju city officials issued notices to 17 individuals who collectively owe 124 million Korean won (approximately $88,600). These taxpayers have until the end of November to settle their debts or face the confiscation and liquidation of their cryptocurrency holdings.
City officials stressed their commitment to tracking assets and penalising tax evasion, warning that digital assets on exchanges are not exempt from enforcement. They believe this move will deter others from attempting to use cryptocurrencies to hide their wealth.
Previous Crypto Seizures in Paju
This initiative is not Paju’s first foray into targeting cryptocurrency to recover unpaid taxes. In July, the city seized digital assets worth 100 million won (around $72,000) from delinquent taxpayers. Authorities revealed that some residents deliberately converted their funds into crypto to avoid meeting tax obligations, despite having the financial capacity to pay.
Paju officials reiterated their resolve to address this issue, emphasising that digital assets cannot serve as a shield against debt collection efforts.
According to Yonhap News, cryptocurrencies have increasingly become a favoured method for evading debt collection in South Korea. The growing adoption of digital assets has created new challenges for tax authorities, who are now leveraging technology to ensure compliance.
Tokenizing Tax Refunds: A New Frontier for South Korean Banks
While tax authorities tighten enforcement on crypto tax evaders, South Korea’s financial sector is exploring innovative uses for blockchain technology. NongHyup Bank, a major South Korean bank, announced a partnership with digital asset platform Fireblocks on November 13 to pilot a tokenized value-added tax (VAT) refund system.
The collaboration aims to create a prototype system for issuing tokenized VAT and goods and services tax refunds on retail purchases. Fireblocks’ tokenization engine will allow digital identifiers to be assigned to assets, enabling real-time tracking from issuance to settlement.
Fireblocks co-founder and CEO Michael Shaulov highlighted the benefits of tokenization, including reduced operational costs, elimination of fraud risks, and the creation of an immutable record to enhance trust between banks and clients.
