Luna founder Do Kwon & company faces S$108.5 million bill for allegedly evading taxes in Korea

Tax authorities in South Korea alleged that Kwon used his Singapore-registered entities to avoid paying taxes.

Andrew Koay | May 19, 2022, 11:57 PM

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When it rains, it pours for crypto-mogul Kwon Do Hyeong, more commonly known as Do Kwon.

The beleaguered founder of the TerraUSD (UST) and Luna cryptocurrencies now reportedly finds himself slapped with a massive tax bill in his native of South Korea, the conclusion of an investigation into whether he had evaded tax payments.

According to Hankyung, Kwon, his company Terraform Labs, and other related officials, have been told to pay a levy of over 100 billion won (S$108.5 million) for dodging corporate and income tax.

South Korea's National Tax Service was first put on alert before Luna's crash when Kwon made moves to liquidate a domestic corporation and take up residence overseas.

The move was believed to have been sparked by Kwon's unhappiness with the country's taxation policy.

The investigation alleged that Terraform Labs had sent cryptocurrencies between its Singapore-registered entities in a bid to avoid paying tax in South Korea.

South Korean tax authorities concluded that despite the transaction occurring overseas, they should be subjected to domestic taxes based on the actual location of Terraform Lab's management.

Kwon may also be ordered to pay taxes imposed on Bitcoin acquired and sold by Luna Foundation Guard, reported Hankyung.

Luna Foundation Guard was once touted as the second-largest known holder of Bitcoin.

Luna and Terra's downfall

Luna, UST, and Kwon have all been in the news recently due to the sudden collapse of the cryptocurrencies.

Both Luna and UST were launched in 2018 and are part of the Terra blockchain.

UST, also referred to simply as Terra, was touted as a stablecoin pegged to the United States dollar using an algorithm.

The price of UST and Luna collapsed as a result of a bank run by holders and selling pressure.

Prior to the crash, Luna was on a massive run, up more than 1,000 per cent over six months.

Kwon has also made headlines in Singapore after a police report was lodged against him and his company.

According to The Straits Times, the police are not investigating the accusations made in the report.

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