South Korea’s National Tax Service (NTS) recently launched an intensive tax investigation into blockchain and crypto venture capital firm Hashed, while its CEO denies any involvement in slush fund raising or tax evasion, according to local media reports.

Fast facts

  • Hashed confirmed that it had cooperated with the 4th Bureau of Investigation from the Seoul Regional Tax Office in its investigation. The bureau agents reportedly collected tax accounting documents from the Hashed main office in Seoul early November. 
  • Kim Seo-joon, CEO of Hashed, recently told local media that every investment in cryptocurrencies were carried out with individual funds from the co-founders of the firm, as local regulations ban corporations from making investments in crypto. Thus, according to Kim, Hashed was not obligated as a corporation to pay taxes — which would invalidate any claims of a slush fund or tax evasion. South Korea’s new tax on individual virtual asset gains are also not yet in effect, since its start date was pushed back from the beginning of 2022 to 2023.
  • Kim clarified that Hashed is not a corporation that invests in cryptocurrency, but rather a research institute that reviews projects when conducting investments with individual capital.
  • South Korea’s 4th Bureau of Investigation carries out sporadic inspection on possible tax evasion through fraud or other intentional illegal acts. However, according to local media reports, it is not likely that Hashed will be handed over to criminal investigations — virtual asset firms have not been able to handle assets properly because accounting standards on cryptocurrencies remain ambiguous. 
  • The NTS has investigated several other blockchain and crypto companies this year, including HN Group, the issuer of HDCA token; Korea Digital Exchange, which operates Flybit exchange; Kakao’s blockchain subsidiary Ground X, and Terra. One industry official says that by examining these blockchain firms, the NTS is reviewing ways to apply taxation on virtual assets.