South Korea’s Tax Agency Probes Upbit and Altcoin Issuers in Crackdown

South Korea’s National Tax Service (NTS) has launched an investigation into Upbit, the country’s largest cryptocurrency exchange, along with several small-cap altcoin issuers. The probe is reportedly focused on tax compliance, potential illicit activities, and market manipulation concerns. This marks yet another regulatory push as South Korea tightens its oversight of the crypto industry.

Why Is Upbit Under Investigation?

According to local reports, the NTS is scrutinizing Upbit’s financial records and transaction histories to ensure compliance with tax laws. The agency is particularly looking into:

• Corporate tax payments and whether Upbit has underreported earnings.
• Suspicious transactions, including possible wash trading or price manipulation involving lesser-known altcoins.
• Revenue streams from token listings and whether they adhere to South Korea’s strict financial regulations.

While Upbit has not been officially accused of wrongdoing, the tax probe signals increased regulatory pressure on crypto exchanges operating in South Korea.

Focus on Small-Cap Altcoin Issuers

Alongside Upbit, South Korean tax authorities are also investigating several small-cap cryptocurrency issuers, particularly those that:

• Experienced sudden, unexplained price surges on Upbit’s platform.
• May have engaged in tax evasion or undisclosed financial dealings.
• Have unclear tokenomics or limited real-world use cases, raising red flags for authorities.

This scrutiny follows concerns over pump-and-dump schemes and the potential role of exchanges in facilitating questionable token listings.

Regulatory Landscape for Crypto in South Korea

South Korea has been ramping up crypto regulations, with authorities pushing for:

• Stronger anti-money laundering (AML) policies.
• Stricter oversight of crypto exchanges and token issuers.
• Taxation frameworks for both corporate and individual crypto earnings.

This latest probe comes ahead of the scheduled implementation of a 20% crypto gains tax in 2025, signaling South Korea’s commitment to tightening tax enforcement in the digital asset space.

Market Reactions & Potential Impact

Following news of the investigation, investors expressed concerns over the regulatory outlook, with:

• Increased volatility in South Korea’s altcoin markets.
• Uncertainty for traders and projects linked to Upbit.
• Speculation about potential penalties if tax violations are found.

Despite the probe, Upbit remains the dominant exchange in South Korea, processing billions in daily trading volume. However, stricter oversight could lead to changes in how exchanges list and manage altcoins going forward.

The South Korean tax probe into Upbit and altcoin issuers underscores the government’s commitment to cleaning up the crypto sector and ensuring compliance with tax regulations. While the outcome of the investigation remains unclear, it serves as a warning to exchanges and token projects operating in South Korea—transparency and compliance are now more critical than ever.