The South Korean Ministry of Strategy and Finance on Monday cleared that virtual asset airdrops, staking rewards and hard forked tokens would be subject to a gift tax under the Inheritance and Gift Tax Act despite the postponement of crypto gains tax to 2025.
Cryptocurrencies are officially referred to as part of virtual assets under South Korean law.
In response to a tax law inquiry about transfers of virtual asset airdrops by crypto exchanges, the South Korean tax authority said that any free virtual asset transfer by crypto exchanges in the form of airdrops, staking rewards and hard-forked tokens would attract a gift tax.
The gift tax will be “levied on the third party to whom the virtual asset is transferred free of charge,” reported a local news publication.
The tax authority cleared that even though virtual asset gains tax would now be applicable from 2025, free virtual asset transfers would still attract a 10-50% tax under the Inheritance and Gift Tax Act. The said tax requires the recipient of the free “gift” to file a gift tax return within three months of receiving it.
However, the ministry also cleared that actual taxation on such virtual asset transfers should be considered on a case-to-case basis, given the lack of regulations around the virtual asset market. A statement from the ministry read:
“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined in consideration of the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred.”
The lack of regulatory guidelines has been responsible for the postponement of the virtual asset gains tax by the authorities on multiple occasions. It becomes quite complex for them to examine all types of virtual asset transactions and form a legal basis around them. Thus, making it difficult to grasp the details of virtual asset donations, even when taxes are levied.
Lending protocol BendDAO has run out of Wrapped Ether (wETH) in its contract. At the time of writing, the contract only has 15 WETH to pay lenders, and an estimated 15,000 Ether (ETH) left to be paid to lenders.
Researcher NFTStatistics.eth dissected the issue in a Twitter thread, highlighting that NFT borrowers in the platform should now pay 100% interest on the ETH they borrowed. In addition, the debt positioned against the NFTs is also on the rise.
Furthermore, the researcher noted that many of the NFTs that have been used as collateral and defaulted currently have no bids. In relation to this, there are more NFTs on the platform's alert list, which are NFTs about to default and come to auction because of the falling NFT floor prices or rising debt and high-interest rates.
According to the BendDAO co-founder, their team is working on a proposal to change parameters within the NFT lending platform. The update will take effect 24 hours after it gets approved through the voting process.
Amid the crisis, a Twitter user took the opportunity to poke fun at the platform, pointing out that even the co-founder of BendDAO is also on the verge of getting liquidated by their own lending platform.
Last week, analysts speculated that there might be an incoming series of NFT liquidations worth $55 million to recover loans on BendDAO. According to Double Studio founder DoubleQ, the situation could lead to a "death spiral" for the entire NFT market and the Bored Ape Yacht Club (BAYC) ecosystem.
Meanwhile, the broader NFT world is not doing any better. At the moment, as floor prices of BAYC and Mutant Ape Yacht Club (MAYC) collections took a nosedive, the newly launched GameStop NFT marketplace has taken a hit, with its daily fee revenue dropping below $4,000.
Cybersecurity analyst Serpent has revealed his picks for the most dastardly crypto and nonfungible token (NFT) scams currently active on Twitter.
The analyst, who has 253,400 followers on Twitter, is the founder of artificial intelligence and community-powered crypto threat mitigation system, Sentinel.
In a 19-part thread posted on Aug. 21, Serpent outlined how scammers target inexperienced crypto users through the use of copycat websites, URLs, accounts, hacked verified accounts, fake projects, fake airdrops and plenty of malware.
One of the more worrisome strategies comes amid a recent spate of crypto phishing scams and protocol hacks. Serpent explains that the Crypto Recovery Scam is used by bad actors to trick those who have recently lost funds to a widespread hack, stating:
“Simply put, they attempt to target people who have already been scammed, and claim they can recover the funds.”
According to Serpent, these scammers claim to be blockchain developers and seek out users that have fallen victim to a recent large-scale hack or exploit, asking them for a fee to deploy a smart contract that can recover their stolen funds. Instead, they “take the fee and run.”
This was seen in action after the multimillion-dollar exploit affecting Solana wallets earlier this month, with Heidi Chakos, the host of the YouTube channel Crypto Tips, warning the community to watch out for scammers offering a solution to the hack.
Another strategy also leverages recent exploits. According to the analyst, the Fake Revoke.Cash Scam, tricks users into visiting a phishing website by warning them that their crypto assets may be at risk, using a “state of urgency” to get users to click the malicious link.
Another strategy uses Unicode Letters to make a phishing URL look almost exactly like a genuine one, but replacing one of the letters with a Unicode lookalike. Meanwhile, another strategy sees scammers hack a verified Twitter account, which is then renamed and used to impersonate someone of influence to shill fake mints or airdrops.
The remaining scams target users wanting to get in on a get-rich-quick scheme. This includes the Uniswap Front Running Scam, often seen as spam bot messages telling users to watch a video on how to “make $1400/DAY front-running Uniswap,” which instead tricks them into sending their funds to a scammer’s wallet.
Another strategy is known as a Honeypot Account, where users are supposedly leaked a private key to gain access to a loaded wallet. But, when they attempt to send crypto in order to fund the transfer of coins, they are immediately sent away to the scammers’ wallets via a bot.
Other tactics involve asking high-value NFT collectors to “beta test” a new play-to-earn (P2E) game or project or commissioning fake work to NFT artists. But, in both cases, the ruse is merely an excuse to send them malicious files that can scrape browser cookies, passwords and extension data.
Last week, a report from Chainalysis noted that revenue from crypto scams fell 65% in 2022 so far due to falling asset prices and the exit of inexperienced crypto users from the market. Total crypto scam revenue year-to-date is currently sitting at $1.6 billion, down from roughly $4.6 billion in the prior year.
This Daily Dose was brought to you by Cointelegraph.