Home Archive South Korean Government to Auction Off Bitcoin Worth $518,000

South Korean Government to Auction Off Bitcoin Worth $518,000

Joseph Young
Last Updated March 4, 2021 4:57 PM

On June 14, Local publications including the Seoul Economic Daily  revealed the plans of the South Korean government to auction of 216 bitcoins worth around $518,000 at the time of reporting, seized during a series of previous investigations into illicit financial activities.

The Korea Asset Management Corporation (KAMCO), an asset management arm of the South Korean government which oversees state-owned properties and taxes, announced in a press conference that digital currencies such as bitcoin can be auctioned off by the government because they are not considered as non-auctionable assets by the South Korean law.

A statement of a KAMCO representative translated by CCN.com read:

With the exception of currencies, assets and securities are auctionable by the South Korean government. Although it is the first auction involving a digital currency overseen by the South Korean government, investors and the public can consider bitcoin as an asset that changes in value over time.

More to that, a KAMCO representative told local publications that once seized, assets, securities and digital currencies such as bitcoin immediately become properties of the government. Through the utilization of a system called “on-bid,” law enforcement agencies and financial regulators can conduct direct auctions to the public to sell seized items from previous investigations, with the exception of the South Korean national currency and reserve currencies.

According to sources, the cyber investigation department of the South Gyeonggi Provincial Police Agency arrested 33-year-old Ahn for operating an illicit website or a marketplace. In South Korea, any form of gambling is strictly prohibited and web-based marketplaces that distribute inappropriate content are banned by the government.

Ahn operated an illicit web-based marketplace which accepts bitcoin for payments. Investigators of the South Gyeonggi Provincial Police Agency arrested Ahn and seven individuals suspected of co-operating the marketplace with Ahn. During the investigation, the local police seized 216 bitcoins, which increased in value by around 2.4x within a two-month period.

Although the South Gyeonggi Provincial Police Agency and KAMCO did not reveal additional details in regard to the web-based marketplace Ahn launched and operated, it is likely an online gambling platform or pornography site, two types of websites that are strictly banned by the South Korean government. During the press conference, KAMCO told reporters that bitcoins that will be auctioned off later this year will most likely be sold at lower rates in comparison to major bitcoin exchanges such as Bithumb, Korbit and Coineone, the three largest bitcoin exchanges in South Korea.

Since the beginning of 2017, the South Korean bitcoin exchange market has transformed into a major bitcoin exchange market after overtaking the Chinese, European and Japanese bitcoin exchange markets in terms of daily trading volume and market share over the global bitcoin exchange market. In consideration of the explosive demand toward bitcoin and other digital currencies and assets such as Ethereum, Ripple and Ethereum Classic within South Korea, it is unlikely that the bitcoins at the auction will be sold at a substantially lower rate than the South Korean bitcoin exchange market rate. However, because the auction begins with a relatively low base price, representatives of KAMCO predict the 216 bitcoins to be sold at a much lower rate than the trading price listed on exchanges including Bithumb, Korbit and Coineone.

Once auctioned, KAMCO stated that 3 percent of the auctioned amount will be considered as a fee and the rest of the amount will be returned back to the South Korean treasury.

Featured image from Shutterstock.