In a significant legal victory for Bithumb Korea, the Seoul High Court has overturned a lower court’s decision, rejecting a 130 million won tax charge initially imposed by the Yeoksam Tax Office. This ruling comes as a notable relief for the Korean crypto exchange, especially given its current regulatory scrutiny.
Court Decision and Tax Charge Overturned
The Seoul High Court's decision marks a crucial win for Bithumb Korea. The lower court had previously upheld a tax charge of 180 million won for the 2019 fiscal year, which had been reduced to 130 million won. The tax authorities had alleged that Bithumb incorrectly altered its method for valuing virtual assets in 2017. Specifically, the company had shifted from using the “first-in, first-out” (FIFO) method to the “gross average method” for inventory valuation.
The appellate court found that Bithumb’s change in accounting method was both legal and justified, given the lack of clear regulatory guidelines on virtual asset accounting at that time. The court noted that Bithumb was acting as a broker and not a principal dealer of virtual assets, which further supported its decision to dismiss the tax charges.
Ongoing Legal and Regulatory Issues
Despite this victory, Bithumb Korea faces ongoing legal and regulatory challenges. The Seoul Central District Court has recently raised concerns regarding the management of the XENT token, leading to an injunction lawsuit. The court criticized Bithumb’s lack of response to the lawsuit and ordered the company to issue an apology to investors, highlighting issues related to internal administrative practices and their impact on investor confidence.
Additionally, Bithumb is embroiled in a legal dispute with SDKK, the operator of the Cent Project, over the withdrawal of trading services for the XENT token. SDKK contends that Bithumb failed to provide adequate information on how the token’s business viability was assessed. Bithumb has defended its decision, arguing that exchanges should have the discretion to manage non-performing assets.
Regulatory Pressures and Future Outlook
Bithumb’s operational landscape is further complicated by heightened regulatory pressures in South Korea. The Virtual Asset User Protection Act has introduced new supervisory fees for cryptocurrency exchanges, with Bithumb’s fee amounting to 21.14 million won. This reflects the increasing legal costs and regulatory oversight facing the exchange.
Moreover, Bithumb has announced its intention to delist the SingularityNET token (AGIX) following the merger of FET and OCEAN into Artificial Superintelligence (ASI). This move underscores the exchange’s ongoing efforts to navigate regulatory complexities while managing its asset portfolio.
Conclusion
The Seoul High Court’s ruling in favor of Bithumb Korea is a significant development, providing relief from a substantial tax charge and reaffirming the legality of its accounting practices. However, the exchange’s path forward remains fraught with legal and regulatory challenges. As Bithumb navigates these issues, its ability to adapt to the evolving regulatory environment and address internal and external disputes will be crucial in shaping its future in the competitive crypto market.
August 2024, Cryptoniteuae