South Korean debt collectors are coming for Crypto

South Korean debt collectors are now seizing crypto in bankruptcy cases — and may soon be given more power to seize coins.

Per Hanguk Kyungjae, the Korea Deposit Insurance Corporation (KDIC), an organization operating under the Financial Services Commission (FSC), has started “holding cryptoassets for the first time” this year.

KDIC is typically involved in public and private bankruptcy cases.

It usually intervenes when bankrupt individuals and organizations declare their inability to pay depositors.

It also offers deposit guarantee programs for businesses of all sizes.

The KDIC provided the information at the request of MP Kim Han-gyu, a member of the National Assembly's Political Affairs Committee.

According to the data, KDIC It identified crypto holdings in 29 bankruptcy cases in the first half of 2023.

And in 16 cases, the debt collection agency “completed seizure measures,” seizing more than $7,400 in coins.

The move follows recent regulatory changes that allow the KDIC to request information from banks dealing with local crypto exchanges.

In the past, KDIC was allowed to submit such requests to traditional financial companies such as banks, securities operators and insurance companies.

Organizations and individuals in bankruptcy cases are able to “hide” their money by trading in crypto and holding it in crypto exchange wallets, the media outlet said.

In the year Starting in September 2021, exchanges operating in the fiat winning market will be legally required to link customer wallets to domestic bank accounts verified by real name and social security number.

This measure has effectively eliminated anonymous crypto trading on local platforms.

And it allowed agencies like KDIC to come up with solutions.

Debt collectors can now request crypto exchange partner banks to hand over account details in bankruptcy cases.

South Korean Debt Collectors to Get More Crypto Powers?

According to the media, KDIC may gain more power in this regard in the near future.

Members of Parliament have “proposed” a bill in the National Assembly that would give investigators the right to request customer data from crypto exchanges.

According to media reports, lawmakers feel that “as the methods of hiding assets become more sophisticated, the powers of surveillance agencies should be expanded accordingly.”

The report concluded that “the amount of crypto assets seized” in bankruptcy cases is “expected to increase in the future” as KDIC officers become more experienced in crypto collection.

Critics say South Korea's crypto policies have recently become more restrictive as the country's biggest economic rival, Japan, seeks to take control.