On Monday, the Seoul Southern District Prosecutor’s Office conducted a search on two of the country’s leading digital asset exchanges, Upbit and Bithumb, as part of an investigation into a growing scandal regarding the suspicious cryptocurrency dealings of a South Korean opposition lawmaker. Kim Nam-kuk, a first-term member of the National Assembly, was accused of owning around 800,000 Wemix coins worth around $4.5 million, which led to his resignation from the Democratic Party.
Allegations of Suspicious Transactions
According to Yonhap news agency, prosecutors seized transaction records and other materials from both Upbit and Bithumb, as well as from Kakao Klip, a blockchain platform run by Kakao Corp. Kim is believed to have digital wallets on all three platforms and allegedly transferred the coins from Bithumb to Upbit in early 2021. The transactions were flagged as suspicious by the Korea Financial Intelligence Unit, which then reported them to the Prosecutor’s Office. It is believed that Kim withdrew the assets before the enforcement of the ‘Travel Rule’ in South Korea, which requires exchanges to report personal information about crypto owners when a transferred amount exceeds a 1 million won threshold.
Kim has also faced allegations of conflict of interest and using insider information, as well as suspicions regarding the source of the money for his crypto investments. He was among the sponsors of a bill delaying income taxation of virtual assets in 2021 and has also been accused of trading coins during meetings of the parliament’s judiciary committee last year.
Prosecutors had sought a search and seizure warrant for Kim’s crypto wallets on two occasions last year, but both requests were dismissed by a South Korean court. However, as the scandal grew in recent weeks, prosecutors expanded their probe and were eventually able to secure a warrant to search the cryptocurrency platforms.
Kim has denied any wrongdoing and has vowed to hold publications accountable for what he considers to be media reports based on false information. Meanwhile, the issuer of the Wemix token, Wemade, has denied any involvement in the lawmaker’s crypto dealings and has threatened to take legal action against fake news.