As the Terra saga continues to unfold, the project’s founders have become the target of the crypto industry’s ire. In the aftermath of Terra’s catastrophic failure, South Korean investors are currently taking legal action against the co-founders.
The affected investors have filed both criminal and civil lawsuits against Terra’s Do Kwon. Represented by the law firm, RKB & Partners, the enraged investors are currently pursuing fraud charges and an order to seize Kwon’s assets.
Another group of South Korean investors, who called themselves “Victims of Luna, UST coins”, has grown to more than 1,500 members. This large group of investors is also allegedly making plans to take legal action against Kwon and Terra’s other co-founder, Shin Hyun-Seong, for illegal fundraising.
These new developments may be a bit inconvenient for the co-founders considering that Terra’s legal team abruptly cut ties with the company amid the fiasco. While most members of the crypto community mocked the legal team for leaving, others lauded their actions.
Commenting on the case, bitcoin proponent Stacy Herbert said:
“Terraform Labs legal team resigns. Nothing they can do when the CEO wouldn’t stop emailing whales with ridiculous ‘rescue’ plans and then tweeting about those proposals as if they were a done deal (they were nowhere near). Stay away from shitcoins unless you can enjoy disasters.
S.Korea Slams Do Kwon With $78M Tax Evasion Fine
While still battling other legal woes, Terra’s CEO is also currently facing tax evasion charges brought against the company by South Korea’s tax regulator and has been mandated to pay a fine of up to $78 million.
Investigations conducted by South Korea’s National Tax Service (NTS) revealed that while Terraform Labs subsidiaries were registered in Singapore and the Virgin Islands, they were being managed in the country, Seoul and Busan precisely, hence the tax evasion charges.
To avoid paying taxes, Kwon decided to dissolve the company’s headquarters in South Korea and move its operations abroad before tragedy struck. He has, however, denied the charges, saying that Terra has no tax obligations in the country.
“We have no outstanding tax liabilities in Korea. The NTS did conduct a tax audit across all the major crypto cos with a presence in Korea and applied Korean tax code to foreign mother companies, and every company ended up paying as a result – we paid in full. Not unique to TFL,” Kwon tweeted.
Kwon Says Shutting Down Terraform Labs Korea Was “Coincidental”
New court documents have revealed that Kwon dissolved the Terraform Labs Korea corporation just a few days before the ecosystem’s cataclysmic collapse.
During a general shareholder meeting on April 30, the project’s executives unanimously agreed to dissolve its Seoul and Busan headquarters on May 4 and May 6.
Interestingly, it was also around this time that UST began its depeg, subsequently initiating a chain reaction that wiped off over $26 billion from the stablecoins market, rendered LUNA worthless, and left investors in large unrealized losses. The correlation between these two events had given rise to speculations about the Terra collapse.
In a recent tweet, however, Do Kwon noted that both events correlating were “purely coincidental.” He said,
“I’ve been in Singapore since last December – this is a personal decision and has long been planned. I’ve been open about being located in Singapore across multiple interviews and podcasts. Shutting down a company just takes some time, and timing is purely coincidental.”
Sharing his views on the Terra crash, Binance’s CZ said that whoever designed the project’s minting dynamics should have their heads checked.
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