In a corporate tax lawsuit, the Seoul High Court has ruled in favour of Bithumb Korea, reversing the ruling by the lower court. The court ruled against the 130 million won tax charge made by the Yeoksam Tax Office. This comes as a boost to Korean crypto exchange, particularly since it is under the regulators’ watch.
Court Rules in Favor of Bithumb
Following the Seoul High Court ruling, the lower court decision that allowed tax charges against Bithumb Korea was overturned. The tax authorities’ initial assessment was 180M won corporate tax in 2019, which was reduced to 130M won. The court stated that Bithumb did not commit any wrongdoing in altering how the virtual assets’ value was determined in 2017.
At that time, the court could not identify any specific regulations regarding the accounting of virtual assets. Bithumb had been using the “first-in, first-out” method in assessing virtual assets in its inventory, but it has changed to using the “gross average method.”
This was seen as the right and legal move, and as such, the tax charges were dropped. The first lawsuit was filed due to the allegation the company provided false income statements by changing the inventory valuation approach.
The previous judgment of the lower court was against Bithumb since it held that the change of the method was not for a valid reason. Furthermore, the court had noted that it did not notify the tax authorities of this change as required by law.
However, the appellate court had a different opinion, citing the lack of proper guidelines on virtual asset accounting in 2017. The court noted that Bithumb operated as a broker earning revenue from commissions rather than buying and selling its inventory.
This was an important aspect in the Korean court’s decision to rule in favour of Bithumb.
Ongoing Legal Challenges
That said, Bithumb still has other legal and regulatory issues to deal with. The Seoul Central District Court recently raised concerns over management in an injunction lawsuit concerning the XENT token removal.
The court deemed Bithumb’s excuse for not responding to the lawsuit unsatisfactory and ordered the company to apologize to investors. To this, the court was wary about how its internal administrative issues affected the investors’ confidence.
Bithumb was under much scrutiny because the price of XENT had increased by 1400% after the injunction was granted. The court pointed out that communication with the clients needed to happen soon.
Furthermore, Bithumb is currently in a legal battle with SDKK, the operator of the Cent Project, regarding the withdrawal of trading services for the XENT token. SDKB stated that Korean exchange failed to provide information on how the token’s business viability was assessed.
Bithumb defended its decision, stating that exchanges must have the discretion to manage non-performing assets.
Regulatory Pressure and Future Outlook
Bithumb is also under pressure due to heightened scrutiny of South Korea, which has tightened the rules for cryptocurrency exchanges. According to the Virtual Asset User Protection Act, Bithumb and other exchanges must pay supervisory fees.
Bithumb’s fee was 21.14 million won, as legal costs increased due to increased regulatory oversight. In addition, the exchange disclosed its intention to delist the SingularityNET token (AGIX) after FET and OCEAN merged into Artificial Superintelligence (ASI).
