South Korean Watchdogs Fines Terraform Labs $78M For Tax Evasion

The challenges surrounding Do Kwon, the co-founder and Chief Executive Officer of Terraform Labs are all the more compounding, with the latest being associated with the South Korean national tax watchdog. According to the local news outlet, Naver News, the embattled blockchain developer has been slammed with a $78 million fine by the tax watchdog for evading corporate tax payments.

According to the news outlet, the National Tax Service is able to impose these fines as the core management operations of Terraform Labs are conducted in South Korea. The company is registered in the Virgin Islands and in Singapore, however, the Korean tax laws only consider the areas of a firm’s management for levying its taxes.

It was reported that Do Kwon was not pleased with the country’s tax regime and has been making proactive moves to liquidate the firm’s assets within South Korea. This was all done in order to avoid the necessary tax payments.

While the investigations into the tax activities of Terraform Labs had been ongoing since June last year. Based on the results of the investigations, Terraform Labs has had to pay the sum of  $3.6 million, or 4.66 billion won, in income tax and $34.7 million, or 44.7 billion won, in corporate tax in the wholly-owned Virgin Island subsidiary of the company.

The Unending Terraform Labs Woes

While Terraform Labs has not officially declared that it is now bankrupt, the firm’s affiliate, the Luna Foundation Guard has confirmed that it has almost depleted its very robust reserve in a bid to save the UST stablecoin that lost its peg to the US dollar more than a week ago.

For what mainstream reports attributed to the fear of where their next paycheck will come from, the three main figures in Terraform Labs’ legal team have also abandoned the company in the wake of the collapse of its associated digital currencies.

Do Kwon also stands the risk of being sued by investors in South Korea that have lost money. A lot of these woes may be averted if Kwon and his allies can find a way to revive the protocol through the forking of the old chain as is currently being voted on at the moment.