According to regional news outlet mk.co.kr, the South Korean government has seized over 260 billion Korean won ($180 million) worth of cryptocurrencies over the past two years due to tax arrears. The country’s politicians enacted regulations allowing for the seizure of digital currencies for tax delinquencies and began enforcing them last year.
One individual living in Seoul, dubbed "Person A," had 1.43 billion won (roughly $101.6 million) worth of tax arrears and his cryptocurrency exchange account wseized by the authorities. The account contained 12.49 billion won (about $88.7 million) of digital assets spread across 20 coins and tokens, including 3.2 billion won (around $2.3 million) in Bitcoin (BTC) and 1.9 billion won ($1.3 million) in XRP.
After the seizure, Person A reportedly paid the arrears and requested to halt the sale of seized assets. If tax arrears are not paid, South Korean law allows authorities to sell confiscated cryptocurrencies at market value.
South Korea is one of the most popular countries in the world for crypto activity, with its digital currencies market growing to $45.9 billion last year. In March, crypto-friendly Yoon Suk-Yeol won the country's presidential elections, and a coin used to mint his signature as a nonfungible token (NFT) surged by 60% shortly afterward. In addition, both leading candidates released campaign-related NFTs for election support.
Yoon has pledged to "overhaul regulations that are far from reality and unreasonable" in South Korea's crypto sector. One of the measures, dating from July, includes postponing a 20% tax on income generated from cryptocurrency transactions in excess of 2.5 million won ($177,550) for two years.
With the crypto community growing bigger and as trading volumes reach new highs, the United States is also making more effort to ensure that its Internal Revenue Service (IRS) could properly collect cryptocurrency tax.
U.S. Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert and IRS Commissioner Charles Rettig announced that U.S. judge Paul Gardephe authorized the IRS to issue a “John Doe summons,” a term used when the IRS investigates unknown taxpayers.
The summons compels the New York-based M.Y. Safra Bank to submit information about taxpayers that might have failed to report and pay taxes on their crypto transactions. According to the announcement, the IRS is specifically looking at users of the crypto exchange SFOX.
The IRS believes that even though crypto users are required to report profits and losses, there’s a significant lack of compliance from taxpayers when it comes to digital assets. According to Williams, the government will use all of its tools to identify taxpayers and make sure that everyone pays their taxes. He explained that:
“Taxpayers are required to truthfully report their tax liabilities on their returns, and liabilities that arise from cryptocurrency transactions are not exempt.”
On the other hand, Rettig said that the authorization of the John Doe summons supports their efforts to ensure that taxpayers dabbling in crypto “pays their fair share.”
Meanwhile, crypto analytics firm Coincub recently released a study that shows which countries are the worst in terms of crypto taxation. Belgium ranked on top for its 33% tax on capital gains and withholding 50% from income on trades. Runner-ups include Iceland, Israel, the Philippines and Japan.
On Sept. 6, the Australian government consulted the public in terms of a new law that excludes crypto from being regarded as foreign currency when it comes to taxation. The government gave the public 25 days to share their opinion on the proposal. If signed into law, the definition of digital currency in the countries’ Goods and Services Tax Act will be revised.
Bitcoin (BTC) mining hosting firm Compute North has filed for chapter 11 bankruptcy, amid growing pressure on the firm due to the effects of crypto winter and rising energy costs. The firm’s CEO Dave Perrill has also stepped down but will remain on the board.
The company submitted a Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of Texas on Sept. 22, which is now pending before Judge David Jones.
Under a Chapter 11 filing, the firm is still able to keep its operations going as it works out a plan to repay creditors. The filing reportedly outlines that Compute North owes around $500 million to 200 creditors, while its assets are said to be worth between $100 million and $500 million.
Compute North offers large scale crypto mining hosting services and facilities, hardware and a BTC mining pool. It is one of the largest data center providers in the U.S. has big name partners in the BTC mining sector such as Compass Mining and Marathon Digital.
Both companies have come out with statements via Twitter, noting that with the information they have at this stage, their business operations will continue as normal.
“Compute North’s staff informed us today that the bankruptcy filing should not disrupt business operations. We are continuing to monitor the situation and will provide further updates as they become available,” noted Compass Mining.
The bearish performance of BTC in 2022 has had a significant impact on the mining sector this year, and in the context of Texas, rising energy costs and multiple power outages during intense heat waves haven’t helped either.
Bloomberg Business reporter David Pan highlighted on Twitter that Compute North may have been impacted by a costly delay to a large mining facility in Texas that it wasn’t able to monetize for months.
“Compute North’s massive 280MW mining facility in TX was supposed to run rigs in April but it couldn’t due to pending approvals. From then to later this year when it finally was able to energize the machines, Bitcoin prices had gone through multiple downward cycles, fundraising opportunities dried up and major lenders scaled back,” he wrote.
Compute North adds to a long list of crypto firms that have either fallen victim to crypto winter — or in some cases helped create it — including Voyager Digital, Three Arrows Capital, Celsius Network and BlockFi to name a few.
This Daily Dose was brought to you by Cointelegraph.