By
Chimamanda U. Martha
April 19th, 2024
Since the collapse of the Terra ecosystem, it’s been one trouble after another. With about 2.8 million Koreans losing their life savings and at least 8 committing suicide, Do Kwon was invited to a Congressional hearing.
The National Tax Agency of South Korea has accused Terraform Labs and its CEO, Do Kwon of tax evasion. In the aftermath of the Luna crash, the nation’s financial watchdog has found Terra Labs guilty of tax evasion.
According to the South Korean Corporate Tax Act, a foreign company still needs to pay tax to the country if the company is domestically managed. This is exactly the case with Terra Labs which though registered abroad in Singapore and the Virgin Islands, was managed domestically. Worse still, Do Kwon reportedly tried to liquidate the company and leave the country before the crash happened. Consequently, both Do Kwon and Terraform Labs have been fined about $78 million.
A History of Tax Evasion
Investigations into Terraform Labs first began in June 2021. The investigation revealed that the company was registered in the Virgin Islands and Singapore. Following the investigations, the Terra subsidiary in the Virgin Islands was fined $3.6 million in income tax and $34.7 million in corporate tax by October.
The decision is reported to have made Kwon unhappy with crypto taxation in the country. According to the report by Naver news, Kwon tried to liquidate Terra’s domestic operations just before the LUNA crash. The financial watchdog busted Terra Labs during the attempt to transfer tokens to LFG in Singapore.
A Multiplicity of Legal Troubles
The fine is the latest of Terra’s legal troubles. Since the collapse of the Terra ecosystem, it’s been one trouble after another. With about 2.8 million Koreans losing their life savings and at least 8 committing suicide, Do Kwon was invited to a Congressional hearing. The hearing, it is hoped, will help determine the cause of the Luna crash and measures to protect investors.
Beyond this, the South Korean government also revived the Grim Reapers of Yeoui-do to investigate Terra’s fall. The previously disbanded team was notable for investigating and prosecuting financial offenders. Between 2013 and 2020, the team racked up 346 arrests from 965 cases.
Despite all the legal troubles, Do Kwon continues to assure the community that there will be a resurrection for LUNA and UST. The CEO went further to outline a rescue plan to revive the tokens. It remains to be seen how that will pan out.