Kakao's blockchain firm Ground X under tax probe related to digital coin trade

Blockchain firms Ground X Corp under Kakao Corp. and The Encore Company are under probe for alleged tax evasion in South Korea during the process of listing a digital coin.

Ground X, an affiliate of the country’s dominant chat app operator Kakao Corp., is accused of omitting income from mandatory tax declaration while listing its digital coin KLAY on cryptocurrency exchanges at home and abroad. It is also accused of undervaluing the worth of KLAY paid out to employees as bonus when it made a tax withholding report.

The Encore Company, a startup behind blockchain technology firm Terra, is pressed with similar charges.

The National Tax Service has been conducting special examination into the two firms since early this month, according to industry sources on Sunday.

Ground X declined to comment on the probe.

KLAY is used in blockchain platform KLAYTN, which is controlled by Singapore-based KLAYTN Pte Ltd.

Ground X in its recent audit report said it collected 27.7 billion won ($24.4 million) worth of KLAY digital money from KLAYTN last year for blockchain platform-related services including system management and business development.

On Monday, KLAY lost 9.4 percent to trade 1,028 won at Coinone, as of 7:14 p.m. in Seoul. Kakao shares closed flat at 155,000 won in the Kospi. Both Ground X and The Encore Company are not listed.

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