Terra’s Founder Do Kwon facing investigation on Tax Fraud
Terra’s Founder Do Kwon facing investigation on Tax Fraud
Terraform Labs CEO Do Kwon is facing investigation for Tax Fraud by the Seoul Southern District Prosecutor’s Office’s Joint Financial and Securities Crime Investigation Team. The prosecution team recently conducted a search and seizure of the National Tax Office to obtain relevant data. Later, South Korea’s national Tax Office made the discovery that Do had benefited from Tax Fraud worth 50 billion won ($39 million).
South Korean Prosecutors Seize Tax Data
According to the local news channels of South Korea, Prosecutors have begun their investigation for tax fraud by Do Kwon. Investigations in Terraform started in June 2021 when the National Tax Office found a suspicious flow of money from an overseas corporation. They later found that Do Kwon has evaded imposed tax of 50 billion won ($39 million). However, the tax office failed to report these finding to the Prosecutor’s office.
There are also allegations of gifting family members funds to purchase an apartment to avoid tax. Do Kwon troubles started way before Terra collapse, however his difficulties are increasing day by day. When the Terra’s stablecoin started losing its peg, rumors came about Do Kown’s pending tax payments of about 100 billion won.
Kwon denied the rumors and gave the statement that he has no outstanding liabilities in South Korea. However, in the initial week of Terra crash, authorities began their investigations where some say that the whole business is a fraud, a Ponzi scheme. Investigation continued on with the summon of Terraform Labs employees regarding their knowledge of risks and design flaws.
Terra Hard Fork and Investigation Saga
While the investigation on Do Kwon in Tax Fraud is ongoing, Terra’s collapse led him suggest the launch of a new blockchain. The earlier stablecoin UST and LUNA tokens have virtually zero value. Terraform had launched Terra 2.0 on 28th May after the approval from the community.
According to experts this was not the right plan of action as forking does not add any value. LUNA 2.0 faced a huge price reduction after the launch. Currently it is trading at $2.41 (Coinmarketcap). There were many reasons for this huge price reduction, the foremost being the rumor of Do Kwon’s involvement in the new Terra creation. According to some, Do Kwon has misled about the fact that Terra 2 is fully community owned.
Do Kwon Denies any Tax Evasion Attempt
The CEO of Terraform Labs recently tweeted that the closure of their two offices in Busan & Seoul was just a coincidence. There is nothing but coincidence that they closed Korean subsidiary just before the Terra collapse and the pending investigation.
According to Do Kwon, he had registered the company in Singapore and “it is still active and in good standing”. Do Kwon is living in Singapore since December 2021. He denied any outstanding tax liabilities in Korea and explicitly stated that they are open to any enquiry or lawsuit. Terraform Labs has nothing to hide.
