South Korean watchdog reportedly fines Terraform Labs $78M for tax evasion

South Korean watchdog reportedly fines Terraform Labs $78M for tax evasion

In the aftermath of the Terra ecosystem’s collapse, Terraform Labs continues to be in legal trouble along with co-founder Do Kwon. The national tax agency has placed the crypto company under surveillance after early reports about a congressional hearing and an investigation by ‘Grim Reapers,’ a financial crime unit.

Naver news reports that the South Korean national tax agency has penalized Terraform Labs’ founder and co-founder with a 100 Billion won ($78 Million) penalty for tax evasion.

According to the report, Kwon was dissatisfied with crypto taxation in the nation since December last year and tried to liquidate Terra’s domestic operations right before the infamous LUNA crash.

Terraform Labs was first suspected of evading income and corporate tax in June 2013. Terraform Labs was found to be registered in both Singapore and the Virgin Islands.

Related: Analysts evaluate the aftermath of Terra’s (LUNA-) collapse

Both the subsidiaries were registered overseas, but the “place of actual management” was South Korea. Korea’s corporate tax law states that the registered country is not considered the place of actual administration for tax purposes.

After Terraform Labs sent Luna (from Terra Singapore to Luna Foundation Guard) to offset the loss of anchor protocol, tax authorities were notified.

In October, Terra’s Virgin Islands subsidiaries were fined 4.66 Billion Won ($3.6 Million) income tax and 44.7 Billion Won ($34.7 Million) corporate tax.

In the wake of the LUNA disaster, South Korea’s policymakers and law enforcement agencies have taken a heavy hit on Do Kwon along with his associates. After 2.5 years, a special unit for investigating financial crimes called “Grimreapers of Yeouido”, was recalled to investigate the matter.

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