Web3 game developer Wemade refuted allegations of coin overissuance fraud during an investigation by the Financial Investigation Department of the Seoul Southern District Prosecutors’ Office. The allegations suggest Wemade may have violated local reporting rules by failing to disclose private keys to users.
The Wemade token WEMIX development team officially announced on February 8 that it has partnered with Play Wallet, Wemade’s digital asset storage system, and PNIX DEX, a decentralized exchange, complies with regulations requiring registration as a virtual asset service provider. It was announced that it was exempt from the requirement.
According to Korean regulations, cryptocurrency service platforms are required to register and report unless they control user assets through private keys. Wemade, which transitioned from a game developer to a token WEMIX and blockchain mainnet issuer, claims exemption from reporting requirements under this standard.
The prosecution’s investigation focuses on suspicions that unfair profits were made by evading regulations. Prosecutors are investigating whether Wemade’s PNIX decentralized exchange and Play Wallet storage system may violate reporting obligations, such as withholding private keys from users.
Wemade claims that all wallet services provided by the Wemix team are decentralized and do not have control over personal encryption keys, so they are excluded from reportable virtual asset transfer, storage, and exchange activities.
Regarding PNIX DEX, Wemade explains that it acts as a platform for making buy and sell offers and facilitating transactions through assets stored in smart contracts beyond the control of the operator. As a result, exchange of virtual assets occurs through individual transactions between users.
The Financial Intelligence Unit (FIU), which supervises the domestic financial sector, also began an investigation into Wemade after receiving a similar complaint.
Despite regulatory scrutiny, Wemade’s parent company launched the $100 million Web3 fund in partnership with a Singapore venture capital fund to invest in digital asset projects in the Middle East. Wemade, famous for its Legend of Mir series, claims that Mir 4, released in 2021, was the most successful blockchain game at the time.
As the investigation progresses, Wemade continues to maintain purity and compliance with regulatory standards while emphasizing its commitment to decentralized services and blockchain innovation.
Position on whether to report some services in the Wemix ecosystem as virtual asset business operators
All services provided by Wemix require high compliance to ensure that Wemix-related businesses and services comply with regulations, including the Specific Financial Information Act of the Republic of Korea and whether or not they are virtual asset business operators (VASPs) in countries around the world and whether to report them. … pic.twitter.com/afVyeZ4hnE— Wemix (@WemixNetwork) February 8, 2024