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Tag: Tax Evasion

  • Kraken to provide information to IRS, Californian federal court

    Kraken to provide information to IRS, Californian federal court

    Regulators throughout the world had been struggling with the complexities of the cryptocurrency industry. Because the blockchain technology is novel and not widely understood, regulating the market had not been an easy feat.

    A federal court in California has ordered the cryptocurrency exchange to provide information about users who have conducted transactions worth $20,000 or more in a year to the Internal Revenue Service in lieu with the “John Doe” summons that the IRS had gotten approved earlier.

    Where South Korea has launched a crackdown of its own on the cryptocurrency industry because of increased tax evasion and money laundering, the US is not lagging far behind. The Internal Revenue Service had held the cryptocurrency industry accountable for almost $1 trillion uncollected taxes. The tax authority has more than disdain for the crypto sphere and has launched a crackdown of its own. The IRS had gotten “John Doe” summons approved earlier which gives the tax regulator immense power.

    However, after a brief cool down the regulator has once again resumed its crackdown with full force. Utilisng the John Dow summons, the Internal Revenue Service had gotten approval from a North California federal court to access the accounts of users with more than $20,000 transactions worth on the leading crypto exchange, Kraken.

    Crypto holders are obligated to meet the same tax obligations – which many are not. The John Doe summons are an effort of the regulator to bring equity to the industry and punish tax evaders. The John Doe summons allow the IRS information about all taxpayers in a specified class – say, with transactions worth $20,000 and above. With the immense power of the John Doe summons, the IRS is set to take the crackdown on cryptocurrency industry to the next level.

  • The next phase in South Korea’s crackdown on cryptocurrencies

    South Korean regulators have asked banks to provide information on their cryptocurrency clients. As the regulators try to understand the complex cryptocurrency sphere, a regulatory body in the country has asked banks to reveal information about corporate accounts of cryptocurrency exchanges that are not listed on real-name basis.

    The country had launched a crackdown on the crypto industry as cryptocurrencies have contributed to a surge in illegal activities like money laundering and tax evasion in South Korea. Various regulatory bodies have joined hands in order to curb the problem with straight monitoring of the crypto industry. Laws have also been passed to help regulate the market as much as possible.

    One of the controversial laws in a 20% capital gains tax imposed on all cryptocurrency profits. The law is set to come into effect in January 2021 and have resulted in a public outcry. Another not-so-controversial law requires users to create accounts on crypto exchanges only on real-name basis. The Act on Reporting and Using Specified Transaction Information has been in effect since March.

    However, only four major cryptocurrency exchanges in South Korea have complied with the law by setting up real name basis accounts while the rest are lagging. The regulators in the country are not taking well to the non-compliance which is why an unnamed regulator has asked bank to reveal privileged information about such corporate clients.

    The crackdown is set to last till June and it appears the regulators have full intentions of utilizing the time efficiently. Earlier, the city of Seoul had seized $22 million worth of cryptocurrencies from tax delinquents. The city’s tax authority, National Tax Service had issued a list of 1,566 individuals and companies with overdue taxes. $22 million worth of cryptocurrencies had been confiscated from 676 of the 1,566 identified tax evaders.

  • South Korea’s Crackdown on Cryptocurrencies

    South Korea’s Crackdown on Cryptocurrencies

    With the world moving towards a fast-paced adoption of cryptocurrencies, regulators are facing a lot of problems trying to navigate the tricky waters of the crypto sphere. Throughout the world, governments have been vocal about the riskiness of cryptocurrency investment whereas others have been worried about the susceptibility of cryptocurrencies to criminal activities. Cryptocurrencies are notoriously known to be hotbeds for illegal activities especially money laundering and tax evasion because of the lack of regulation in the industry.

    Asia have had a love-hate relationship with cryptocurrencies but amidst the recent rise in crypto adoption, regulators have become increasingly strict. South Korean regulatory authorities have joined hands to crackdown on the rampant illegal activities going on in the cryptocurrency market. The Ministry of Economy and Finance, the Ministry of Justice, the Financial Services Commission, and the National Police Agency have, together, launched a plan to eradicate the problems brought by cryptocurrencies. With every agency playing its role, there has been an increase in monitoring of transactions – in the country as well as across border.

    The crackdown has come to fruition as the city of Seoul has announced the seizure of $22 million worth of cryptocurrencies on account of tax evasion from individuals and companies. The city’s tax authority, National Tax Service, had identified 1,566 individuals and company executives with overdue taxes. $22 million worth of cryptocurrencies were seized from three different cryptocurrency exchanges from 676 of the 1,566 individuals.

    Out of the total tax delinquents, 118 of them have remitted $1 million to the government. The cryptocurrency holders have also appealed to the government to not liquidate the cryptocurrencies as their value is expected to increase.