South Korean Lawmaker Acquitted in Crypto Asset Concealment Case

South Korean lawmaker Kim Nam-kuk has been acquitted of charges related to concealing cryptocurrency holdings after a court ruling on February 10. The court determined that Kim was not obligated to disclose his virtual assets under South Korea’s laws at the time of the alleged concealment.

Kim, a former member of the Democratic Party, faced accusations of liquidating crypto assets and failing to report approximately $4.5 million in profits before the enforcement of the Financial Action Task Force’s (FATF) "Travel Rule." This rule, which requires individuals to disclose their crypto assets, was not yet in effect when the alleged offense took place.

Court's Ruling

The case was heard by Judge Jeong Woo-Yong from the 9th Criminal Division of the Southern Seoul District Court. The court ruled that Kim was not guilty of obstructing public duty by deceit, as prosecutors had alleged. Kim had been accused of hiding his crypto holdings to influence the National Assembly’s Ethics Committee's review of lawmakers' financial disclosures.

In December 2024, prosecutors requested a six-month prison sentence for Kim, claiming that he had falsely reported his total assets as 1.2 billion won (around $834,000) in 2021, while concealing nearly 9.9 billion won ($6.8 million) in cryptocurrency. Prosecutors argued that this concealed wealth posed a potential conflict of interest, particularly since Kim had some involvement in the legislation related to digital assets.

However, the court found that at the time of the alleged actions, South Korea’s Public Service Ethics Act did not mandate the disclosure of virtual assets. Judge Jeong concluded that there was no legal requirement for Kim to disclose his cryptocurrency holdings, and the Ethics Committee’s review had not been obstructed by deceit.

The court stated, “This is considered a case without criminal evidence,” emphasizing that it was difficult to prove Kim’s actions had obstructed the review process.

Kim's Departure from the Democratic Party

The controversy surrounding Kim’s crypto holdings led to his departure from the Democratic Party. In an effort to relieve party members of the burden caused by the lawsuit, Kim chose to leave his political position. While the court's ruling has cleared him of criminal charges, prosecutors may still appeal the decision in a higher court.

Conflict of Interest Concerns

As a lawmaker, Kim had a role in handling legislation concerning digital assets. He was reportedly in favor of a proposal to defer a 20% tax on crypto gains, which raised concerns about a potential conflict of interest due to his substantial personal holdings in cryptocurrency. Kim has consistently denied any wrongdoing, claiming that his decisions were not influenced by his personal assets.

While the court's ruling in this case has cleared Kim of charges, it has also sparked debate about the transparency and regulation of crypto holdings among public officials. Critics continue to question whether there should be stricter requirements for lawmakers to disclose their digital assets, particularly as cryptocurrencies gain prominence in the global financial landscape.

As of now, the case remains open for appeal, and further legal proceedings may yet unfold in the higher courts.