Prosecutors raid NTS for information on Do Kwon and Terra

Terraform Labs CEO Do Kwon [SCREEN CAPTURE]

Prosecutors raided the National Tax Service (NTS) seeking information on Do Kwon, CEO of Terraform Labs and mastermind behind cryptocurrencies that collapsed and lost almost all their value last month.

The Seoul Southern District Prosecutors' Office recently obtained information on an NTS tax investigation into Kwon, according to local media reports on Thursday.

The date of the raid was not disclosed.

Kwon and Daniel Shin, Terraform Labs co-founders, attended a special tax investigation at the NTS Seoul Regional Office last June on charges of tax evasion. The NTS assessed 50 billion won ($38.4 million) in corporate and income taxes after they were found to have siphoned profits earned from trading cryptocurrencies to a tax haven, the reports said.

The prosecution in Korea initiated an investigation into the crash following a complaint by a group of investors alleging fraud and fund-raising without approval by Terraform Labs and its co-founders.

The prosecution plans to investigate Terraform Labs' flow of funds based on the NTS data, the reports said.

There is a possibility that the prosecution will also investigate Kwon giving coins to his family and evading gift taxes in the process of purchasing an apartment. Prosecutors are also expected to be able to see more clearly the flow of funds from Terraform Labs through the analysis of tax investigation data.

Since the crash last month, complaints have been filed against Terraform Labs and its co-CEOs. They were filed by LKB & Partners on behalf of five clients and an online community — Gathering of Terra Luna Coins Victims — hosted on Naver.

The value of TerraUSD, a stablecoin pegged to $1, and sister coin Luna plummeted in mid-May. Luna was once No. 8 globally in terms of market capitalization, peaking at $119.22 on April 5. It collapsed to trade at less than a cent.

Terraform Labs issued a new Luna on May 28. But its value also nosedived.

"Please say things that are proven and true," wrote Do Kwon on his Twitter account on Sunday. "I lost most of what I had in the crash too."

BY JEONG YONG-HWAN [lim.jeongwon@joongang.co.kr]