In the aftermath of the Terra ecosystem’s demise, Terraform Labs and co-founder Do Kwon have been dragged into greater legal problems. Following early indications of a possible congressional hearing and a probe by the financial crimes unit of the ‘Grim Reapers,’ the crypto company has now caught the attention of the US Internal Revenue Service.
According to a report in Naver news, South Korea’s national tax department has fined Terraform Labs and its co-founder $100 million for tax evasion.
According to the source, the Kwon has been dissatisfied with crypto taxation in the country since December and attempted to liquidate Terra’s domestic activities right before the catastrophic LUNA meltdown.
South Korea was the place of actual management
Terraform Labs was first suspected of dodging corporate and income taxes by tax officials in June of last year. Terraform Labs and its companies were discovered to be registered in both the Virgin Islands and Singapore, according to the study.
Despite the fact that both subsidiaries were registered in another country, South Korea was the ‘place of actual management.’ The place of real management is taken into account for tax purposes rather than the registration country, according to Korea’s corporation tax laws.
After Terraform Labs transported Luna from Terra Singapore to Luna Foundation Guard (LFG) to avoid taxes or compensate for the loss of anchor protocol, the tax authorities were notified.
Terra subsidiaries in the Virgin Islands were penalised 4.66 billion won ($3.6 million) for income tax and 44.7 billion won ($34.7 million) for corporation tax earlier this month.
In the aftermath of the LUNA crash, South Korean law enforcement and officials have slammed Do Kwon and his cronies. After 2.5 years, the “Grim Reapers of Yeouido,” a special financial crime investigative unit, was summoned to investigate the project.