South Korea: Lawmaker faces criticism over digital currency holdings, disobeying travel rule

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Kim Nam-kuk, an opposition member of the South Korean National Assembly, reportedly sold his digital currency holdings without making proper disclosures to the authorities, according to The Korea Times.

As per the report, Kim liquidated his assets in the weeks leading up to the country imposing a travel rule on digital currency transactions. Under the rules, digital asset exchanges are expected to report details of digital currency transactions in excess of $1,000 to authorities following the recommendations of the Financial Action Task Force (FATF).

At the moment, investigators from the Korea Financial Intelligence Unit are probing Kim for liquidating KRW 6 billion ($4.54 million) worth of digital currencies, a move which critics are terming an abuse of authority. Kim has been active in creating new legislation for the local digital currency industry, famously championing the deferring of the proposed 20% tax on the asset class.

In his defense, Kim said he did not liquidate the holdings, only transferred them to another exchange that did not infringe any law. The opposition lawmaker has previously maintained that his activities in the digital currency ecosystem and his parliamentary duties did not create a conflict of interest.

Swathes of critics have taken swipes against Kim, claiming a misuse of his position to avoid making proper disclosures of his digital currency holdings. The bulk of the criticisms appears to be targeted against Kim’s previous claims that he is “a poor politician who stands with the socially vulnerable.”

“This is a serious moral hazard. He appeared to have had a get-rich-quick-scheme with crypto trading,” said Daegu Mayor Hong Joon-pyo. “He should have left his job as a lawmaker and focused on speculative trading instead.”

Hong added that Kim’s attempts to delay the application of the 20% taxation for digital currencies were driven by his need to protect his holdings.

“I did not borrow and receive money from anyone at all,” said Kim. “I sold some of my stocks to use for the initial crypto investment…and I can transparently share all of the transaction records.”

Blanket ban for lawmakers?

Across the Pacific, U.S. lawmakers are pushing for legislation banning Congressmen from trading stocks and digital currencies. The bill, presented by both Democrats and Republican lawmakers extends to spouses and dependents of lawmakers.

“The ability to individually trade stock erodes the public’s trust in government,” Alexandria Ocasio-Cortez said. “When members have access to classified information, we should not be trading in the stock market on it.”

Several U.S. lawmakers have confirmed their digital currency holdings, but experts remain confident that the bill will be amended to exclude the asset class.

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