Wednesday, November 29, 2023

South Korean Regulators Fine Terraform Labs For Tax Evasion

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The South Korean regulators fine Terraform Labs for tax evasion since foreign-registered companies are treated as domestic if the decision-making process and the operations are carried out from the country so let’s read more today in our latest cryptocurrency news.

Terraform Labs founder Do Kwon continues to fall deeper into legal trouble in the wake of the collapse of the Terra ecosystem. After the reports of a congressional hearing and an investigation from financial crimes units, the crypto company came under the radar of the south Korean tax agency. According to the reports by Naver news, the South Korean regulators fine the Terraform Labs and the co-founder with a $78 million penalty for tax evasion charges. The reports outlined that Kwon was unhappy with the crypto taxation in the country since a year ago and tried to liquidate Terra’s domestic operations before the Terra crash happened.

Terraform Labs came under fire from tax authorities last year on suspicions of evading corporate and income tax and the investigation into Terraform Labs revealed the company was registered in the Virgin Islands and in Singapore. Both of the subsidiaries were registered abroad and the place of the actual management was South Korea. According to Korea’s corporate tax act, the place of the actual management is considered for tax purposes rather than the registered country.

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The Tax authorities were alerted after Terraform Labs sent LUNA from Singapore to the Foundation Gaurd in order to avoid taxation or makeup losses of the Anchor protocol. Virgin Islands subsidiaries were fined $3.6 million or 4.46 billion won with an income tax and $34.7 million in corporate tax. South Korea’s law enforcement agencies came down hard on Kwon and his associates after the LUNA crash. The special financial crime investigation unit is even called Grim Reapers after 2.5 years of investigation of the proejct.

As recently reported, As UST and LUNA founder Do Kwon has a hard time resolving the currency crash that shocked the market last week, the Terra community is not sure about a proposal for a hard fork. The proposal for The Terra Blockchain outlined plans for a hard fork which means it is split off from the original chain that the new chain operated under the new rules. Accoridng to the Builder Alliance, some of Terra’s VCs, validators, and others helped to create a proposal.

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