South Korean Web 3 Game Developer Wemade Is Under Regulatory Investigation – Denies Claims

Wemade, a South Korean Web3 game developer, is currently under investigation by local prosecutors. 

According to a local media report, Wemade is being investigated due to allegations of unfair profits that resulted in potential circumvention of rules that required virtual asset service providers to register with authorities. 

Prosecutors are also investigating Wemade-associated decentralized exchange (DEX) PNIX and its Play Wallet digital asset storage concealed users’ private keys. Initially, Wemade later ventured into issuing its tokens WEMIX and launching the main blockchain network. 

Meanwhile, Wemade has denied the allegations of coin over-issuance fraud filed by the Seoul Southern District Prosecutor’s Office’s first financial investigation department. In addition, Wemade claims that PNIX DEX is exempted from compliance requirements mandating registration with authorities for virtual asset service providers.

As per South Korean regulations, crypto service platforms are obligated to register and report, except those lacking control over user assets via private keys. Wemade, transitioning from game development to launching its token WEMIX and blockchain mainnet, asserts exemption from reporting obligations under these rules.

Furthermore, Wemade mentioned that all wallet services from the Wemix team are decentralized. They clarified that they don’t have control over personal encryption keys. Therefore, they can’t be involved in virtual asset transfer, exchange, or storage because they’re not technically responsible for safeguarding the assets.

The Wemix team clarified that Phoenix DEX only provides a platform for posting buy and sell proposals and facilitating transactions. Assets are kept in smart contracts, not controlled by the business operator. As a result, virtual assets are exchanged directly between users in individual transactions.

ABOUT THE AUTHOR See More

Sophia Cruz

Financial Writer - Asian & European Desks

Sophia is an experienced writer, reporter and newsdesk member, mostly on the financial sectors. For the past 5 years Sophia has covered a wide variety of topics such as the financial markets, economics, technology, fin-tech and trading. Sophia has been a part of the FX Leaders team since 2017 and works on producing valuable content and information for traders of all levels of experience.

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