A South Korean watchdog reportedly fined Terraform Labs $78 million for tax evasion

A South Korean watchdog reportedly fined Terraform Labs  million for tax evasion

Terraform Labs and its co-founder Do Kwon continue to attract more legal trouble following the collapse of the Terra ecosystem. Following early reports of a possible congressional hearing and an investigation by the Grim Reapers financial crimes unit, the crypto firm has now entered the radar of the national tax agency.

According to a report in Naver news, South Korea’s national tax agency has slapped Terraform Labs and its co-founder with a $78 million, or 100 billion won, penalty on charges of tax evasion.

The report highlighted that the Kwon was unhappy with the taxes on cryptocurrencies in the country since last December and tried to liquidate Terra’s domestic operations just before the infamous fall of Terra (LUNA) took place.

Terraform Labs was reportedly first targeted by tax authorities in June last year for suspected corporate and income tax evasion. Investigation into Terraform Labs and its various subsidiaries revealed that the company was registered in the Virgin Islands and Singapore.

Although both subsidiaries were registered abroad, the “actual place of management” was South Korea itself. Under Korea’s corporate tax law, the place of actual management for tax purposes is considered to be the registered country.

Tax authorities were alerted after Terraform Labs sent Terra Singapore’s LUNA to the LUNA Foundation Guard (LFG) to avoid taxes or offset Anchor Protocol losses.

Previously, in October, Terra subsidiaries in the Virgin Islands were fined USD 3.6 million, or 4.66 billion won, in income tax and USD 34.7 million, or 44.7 billion won, in corporate tax. .

South Korean law enforcement and policymakers have come down hard on Do Kwon and his associates after the LUNA crash. A special financial crime investigation unit, called the Grim Reapers of Yeouido, was called up after two and a half years to investigate the project.

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