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## South Korean Debt Collectors Seize Crypto in Insolvency Cases


South Korean debt collectors are now seizing cryptocurrency in insolvency cases, and there are plans to grant them even more power in confiscating coins. The Korea Deposit Insurance Corporation (KDIC), operating under the Financial Services Commission (FSC), has recently started seizing cryptoassets for the first time. The KDIC usually intervenes in public and private insolvency cases when bankrupt individuals and firms are unable to repay depositors. They also offer deposit insurance programs for businesses of all sizes.

According to data submitted by the KDIC at the request of MP Kim Han-gyu, they have identified crypto holdings in 29 insolvency cases in the first half of 2023. In 16 of these cases, the debt collection agency completed seizure measures and confiscated over $7,400 worth of coins.

This development follows regulatory changes that allow the KDIC to request data from banks working with domestic crypto exchanges. Previously, this privilege was limited to traditional financial companies like banks, securities operators, and insurance companies. Firms and individuals in insolvency cases could “hide” funds by trading them for crypto and holding them in crypto exchange wallets. However, with exchanges required to link customer wallets to real-name and social security number-verified domestic bank accounts, anonymous crypto trading on domestic platforms has been effectively eliminated.

The KDIC can now ask crypto exchange partner banks to provide account details in insolvency cases, enabling them to access previously hidden assets. In the near future, there are plans for the KDIC to gain even more power in this regard. Proposed bills in the National Assembly aim to grant investigators the right to demand customer data from crypto exchanges. Lawmakers believe that as methods of hiding assets become more sophisticated, monitoring agencies need expanded powers to keep up.

As KDIC officers gain more experience in crypto collection, it is expected that the quantity of seized cryptoassets in insolvency cases will increase. However, critics argue that South Korea’s crypto policies are becoming increasingly restrictive, while their economic rival Japan looks to deregulate.

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