Exclusive: 'Crypto-rich' borrowers cannot be screened out... New Leap Fund has a 'gap' in virtual-asset screening

[Financial News] The New Leap Fund, the Lee Jae-myung administration's debt-forgiveness policy, has been found not to examine whether borrowers hold virtual assets. As a result, even borrowers who hold large amounts of virtual assets and have the ability to repay their debts may receive debt forgiveness. Critics say the government is effectively standing by despite the disclosure of around 270 cases of concealed virtual assets under the similar debt-forgiveness policy known as the Saechulbal Fund.
According to data KAMCO submitted to Kim Jae-seop, a People Power Party lawmaker on the National Assembly's Political Affairs Committee, on the 29th, KAMCO does not screen borrowers for virtual-asset holdings when verifying their assets. This means the relevant measures have effectively gone unused, even though a revised Credit Information Act allowing government debt-adjustment agencies, including KAMCO, to check virtual assets and other assets without debtors' consent has taken effect.
This means there is no way to screen in advance whether borrowers applying for debt forgiveness under the New Leap Fund possess enough assets to repay their debts. The New Leap Fund is a program that supports debt repayment for individuals, including sole proprietors, who have been delinquent for seven years or more and whose total principal across unsecured-debt accounts is no more than 50 million won. The policy is intended to "provide socially disadvantaged people with an opportunity to rebuild," but allowing people who possess enough virtual assets to make a fresh start would not fit that purpose.
KAMCO says it instead conducts post-approval monitoring through a reporting system for fraudulent claims. If concealed assets, including virtual assets, are discovered after a report is filed with the Hidden Assets Reporting Center, KAMCO can recover the amount of debt forgiven or even seek damages. KAMCO said no case has yet been confirmed in which additional assets, such as virtual assets, were found among borrowers whose debts had already been written off.
However, cases in which borrowers concealed their virtual-asset holdings have been uncovered under the Saechulbal Fund, which forgives the debts of long-term delinquent borrowers who are small-business owners or self-employed. A Board of Audit and Inspection (BAI) audit in December last year confirmed a case in which a borrower received forgiveness of 120 million won in debt despite holding approximately 430 million won in virtual assets. According to the announcement at the time, 269 of the 17,533 people who received debt reductions of at least 30 million won held virtual assets worth 10 million won or more, with the largest holding valued at 570 million won. The total amount forgiven for these individuals was 22.5 billion won. At the time, the Financial Services Commission said, "We are discussing ways to verify whether applicants hold virtual assets in cooperation with virtual-asset service providers," but the possibility that the same issue will recur under the New Leap Fund is far from negligible.
Kim Jae-seop said, "If the government cannot even verify whether borrowers hold virtual assets while implementing a large-scale debt-adjustment policy worth more than 2 trillion won, it is difficult to say that their repayment ability is being properly assessed." He added, "If there is no mechanism to screen out people who hold or conceal in virtual assets the property needed to repay their debts, a fairness issue with people who have faithfully repaid their debts will inevitably arise."
[email protected] Lee Hae-ram Reporter