Contrary to the expectations of detractors and some skeptical industry watchers, especially in South Korea, and much to the delight of management and staff of the Korean exchange giant, Bithumb, the company has reportedly been handed a clean bill of health (has been cleared) by South Korea`s National Tax Service over suspicions of possible tax evasion and shady business deals.


Following a multiplicity of concerns expressed by some investors, Bithumb, arguably one of the high-flying South Korean cryptocurrency exchanges has in recent times been targeted by a couple of South Korean state agencies.

Another exchange company Upbitlaunched by the biggest messaging app developer in Korea, Kakao was not left out of the investigations. State Agencies that got involved in these investigations included The Financial Services Commission (FSC), Korea Financial Intelligence Unit (KFIU) and the National Tax Service (NTS).


The NTS`s investigations were commenced in January 2018 and lasted for three (3) months, reports indicate. Investigations were rigorous and intense. A full audit was carried out on Bithumb`s cryptocurrency holdings and dealings. Company files and devises that had been computerized were temporarily seized to aid in investigations. In order to evaluate and thereby determine tax compliance or otherwise, the histories of company`s exchange transactions were closely examined by investigators.


It will be recalled that in 2017, demand increases in cryptocurrency purchasing and trading engendered significant gains for exchange companies in South Korea, including Bithumb. Official reports from the company pointed to a 171-fold increase in profits over the course of one year. Apparently, Bithumb was not the only exchange company to have made enormous profits.


The incredible gains made in profitability by the Bithumb seemed to have ruffled some feathers. It appears not to have ‘sat quite well’ with some investors and state agencies and so turned out to be one of the major factors that fueled suspicions and eventually resulted in the launch of full scale investigations into the company`s financial dealings.


Sound argumentation can be put forward as to how these enormous profits were made over a relatively brief period. What seems to have been the case was many cryptocurrencies appreciated in value over the course of the year.


A historical fact that might have been lost out on some is that, the recently concluded investigations into Bithumb is only one of several investigations the company has had to endure over a four year period.


A representative of NTS is reported to have made these admissions: “NTS initiated several investigations into Bithumb between 2014 and 2017, and over the past four years, Bithumb has continuously paid all of the taxes imposed on the company without any conflict with the NTS”. He added, “while a $28 million tax was imposed onto Bithumb, no evidence [of] tax evasion and illicit activities was shown and the NTS closed the investigation into Bithumb, officially clearing the company.”


Bithumb has ceased services to all persons resident in 11 selected countries. This has been a collaborative effort with South Korean Financial authorities as part of measures being adopted to address the challenge of money laundering in South Korea.


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