Court Rules in Favor of Bithumb Korea in Corporate Tax Lawsuit

Following the Seoul High Court ruling, the lower court decision that allowed tax charges against Bithumb Korea was overturned.

A Seoul High Court ruling has come down in favor of Bithumb Korea in a corporate tax lawsuit, overturning the lower court's decision. The court ruled against the Yeoksam Tax Office's 130 million won tax charge.

This is a positive development for the Korean crypto exchange, especially as it faces increased scrutiny from regulators.

Court Overturns Lower Court Ruling

The Seoul High Court overturned a lower court decision that allowed tax charges to be levied against Bithumb Korea. The tax authorities initially assessed 180 million won in corporate tax for 2019, which was later reduced to 130 million won.

However, the court found that Bithumb did not commit any wrongdoing in altering the method used to determine the value of virtual assets in 2017. At the time, the court noted the absence of specific regulations governing the accounting of virtual assets.

While Bithumb had been using the “first-in, first-out” method to value virtual assets in its inventory, it later switched to the “gross average method.” This decision was made in response to a request from the tax authorities to use a method that would result in higher taxable income.

The court ultimately viewed this change in method as legal and valid, leading to the dismissal of the tax charges. The initial lawsuit stemmed from allegations that the company provided false income statements by altering the inventory valuation approach.

The lower court had previously ruled against Bithumb, arguing that the change in method was not made for a valid reason. Additionally, the court stated that Bithumb failed to notify the tax authorities of this change as required by law.

Upon appeal, the appellate court disagreed with this assessment, highlighting the lack of clear guidelines on virtual asset accounting in 2017. The court also noted that Bithumb operated as a broker, earning revenue from commissions rather than buying and selling inventory.

This played a crucial role in the Korean court's decision to rule in favor of Bithumb.

Further Legal Challenges for Bithumb

Despite this victory, Bithumb still faces a range of other legal and regulatory challenges. In a recent development, the Seoul Central District Court raised concerns over management in an injunction lawsuit concerning the XENT token removal.

The court expressed dissatisfaction with Bithumb's lack of response to the lawsuit and ordered the company to apologize to investors. It also highlighted its担忧 over how internal administrative issues affected the investors' confidence.

The court's attention was drawn to the sharp increase in the price of XENT, which rose by 1400% after the injunction was granted. It emphasized the need for prompt communication with clients in such matters.

Moreover, Bithumb is currently engaged in a legal battle with SDKK, the operator of the Cent Project, over the delisting of the XENT token from trading services.

SDKK claims that the Korean exchange failed to provide sufficient information on how the token’s business viability was assessed before making the decision to remove it from the platform.

In response, Bithumb maintains that exchanges have the discretion to manage non-performing assets and decide which tokens to delist.

Increased Regulatory Pressure and the Road Ahead

As South Korea places greater emphasis on protecting virtual asset users, crypto exchanges like Bithumb are facing increased regulatory scrutiny and higher supervisory fees.

Under the Virtual Asset User Protection Act, Bithumb and other exchanges are now obligated to pay these fees, which are used to cover the costs of regulatory oversight. In Bithumb's case, the fee amounted to 21.14 million won.

Furthermore, the exchange announced its decision to delist the SingularityNET token (AGIX) following the merger of FET and OCEAN into Artificial Superintelligence (ASI).

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