The ICON Foundation chairman refuted speculations that the investigation will affect the ICON project and emphasised that all legal requirements were satisfied
Min Kim, Chairman of the ICON foundation, said in an official statement today that the foundation will not be affected by the South Korean tax official’s investigation into ICONLOOP, adding that its technical partner ICONLOOP functions as a completely separate entity.
The Switzerland-based non-profit organisation, ICON Foundation, had raised over $42 million in 2017 through an initial coin offering for the native coin of the ICON blockchain, ICX. ICONLOOP is the ICON Foundation’s technical partner and the creator of the “loopchain” technology upon which ICON is based. It operates out of South Korea and has previously worked with the Seoul government on a number of blockchain-based projects, including COVID-19 tracking apps, citizen rewards and mobile driving licences.
However, at the end of February, ICONLOOP appeared on the Seoul Regional Tax Office’s radar, resulting in 10 employees to be dispatched to investigate ICONLOOP’s headquarters in Euljiro.
According to local reports, the investigation is ongoing and is expected to last for at least three months, with the final report anticipated to be made public by June.
ICONLOOP joins HN Group as the second blockchain firm being investigated by Korean tax authorities since the beginning of 2021. While tax laws concerning the issuance of virtual assets in South Korea are expected to be implemented next year, the tax office is hunting down firms to investigate potential tax evasions that can occur when virtual assets issued by overseas foundations are transferred into South Korea.
ICONLOOP is currently under investigation regarding the possible transfer of ETH funds raised by the ICON Foundation in 2017 as part of the ICO, the details of which ICONLOOP has refused to provide to the authorities. The blockchain firm has argued that the tax office cannot demand these details since it operates as a small or medium-sized business.
ICON Foundation’s Min Kim explained the legal and jurisdictional distance between the foundation and ICONLOOP in the Foundation’s first response to the incident.
“We want to make it clear that the ICON Foundation is not under investigation by the Korean National Tax Service authorities. The ICON Foundation is regulated by the Swiss Financial Market Supervisory Authority (FINMA),” he said.
He further added that the investigation will have no bearing on the ICON Foundation or the ICON project, clarifying that all legal requirements have been satisfied. Kim also pointed out that despite ICONLOOP being an important technical partner for the foundation, it is operated independently.
“We are confident that this investigation would not affect the deliverables and progress for the ICON project,” he concluded.