South Korean Lawmaker in Crypto Scandal Survives Expulsion Vote

Rep. Kim Nam-kuk, the independent South Korean lawmaker facing scrutiny over his crypto holdings, has retained his seat in the country’s National Assembly. A parliamentary ethics subcommittee’s bipartisan vote to expel the first-time legislator ended in a tie (3-3 decision), Yonhap News Agency reported earlier today (Wednesday).

No Boot for Embattled South Korean Lawmaker

The ruling People’s Power Party (PPP) and the opposition Democratic Party (DP) hold an equal number of seats on the subcommittee, the outlet said. The group needed a majority to dismiss the lawmaker, who is a former member of the opposition party.

Finance Magnates reported in May that South Korean prosecutors made an effort to probe Kim after receiving information from the South Korean Financial Services Commission’s Financial Intelligence Unit (FIU) about suspicious crypto transactions reportedly made by the lawmaker. Kim reportedly had about 800,000 WEMIX coins in his crypto wallet between January and February 2022. The coins were said to be worth six billion won (or $4.5 million) at the time.

The legislator was accused of withdrawing all of the coins before South Korea implemented the Financial Action Task Force’s (FATF) travel rule on March 25 last year. FATF is a global money laundering and terrorist financing watchdog.

To implement the travel rule, South Korea mandated domestic crypto exchanges to reveal the identities of entities and transactions exceeding one million won. Previously, Kim clarified that he neither withdrew his digital assets nor violated any law.

As part of an investigation into the allegations, prosecutors recently raided three local crypto exchanges, including Upbit. In addition, PPP recently sent a team to WeMade, the company behind the WEMIX token, with the hope of shedding light on the case.

In the wake of the scandal, in May, Kim gave up his membership in the DP and became an independent legislator. Last week, Kim announced that he will not seek re-election in the upcoming general elections, according to Yonhap News Agency. The declaration is widely interpreted as an attempt by the lawmaker to get a milder penalty from the parliamentary ethics committee.

With the vote conducted on Wednesday ending in a stalemate, the parliamentary ethics committee can either start a new session to re-raise the expulsion motion, or it can conduct a new vote within the subcommittee to impose a less harsh disciplinary action against Kim, the local media added.

Lawmakers to Declare Digital Asset Holdings

Meanwhile, while South Korea’s Public Service Ethics Act require top government officials to disclose their traditional assets to the public, the law does not include cryptocurrencies within its scope. To change this, the parliament has introduced a new bill that will require legislators to declare their digital asset holdings.

In May, the People’s Power Party sought to move up the enforcement date for the regulation. The bill was expected to come into force in December, Finance Magnates reported. However, Yun Jae-ok, the Floor Leader of the ruling party, said the date “is too distant.”

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