Crypto News– South Korean Web3 game developer Wemade, boasting a market capitalization of 1.6 trillion Korean won ($1.2 billion), finds itself under investigation by local prosecutors, as per reports from South Korean news outlets.
Wemade Faces Scrutiny Over Allegations of Avoiding Reporting Responsibilities
The investigation revolves around allegations of unfair profit accumulation stemming from potential evasion of regulations mandating virtual asset service providers’ registration with authorities, as reported by local news outlet Munhwa.
In South Korea, regulations dictate registration and reporting obligations for crypto service platforms, excluding those that do not exercise control over user assets via private keys. Despite originating as a game developer, Wemade has transitioned to issuing its own token (WEMIX) and blockchain mainnet. The company maintains that it is not obligated to comply with reporting requirements.
Prosecutors are purportedly scrutinizing whether Wemade’s decentralized exchange, PNIX, and its digital asset storage system, Play Wallet, retain private keys from users. The investigation aims to ascertain if PNIX and Play Wallet services breach the regulations by sidestepping reporting obligations required for platforms not providing users with private keys, according to Munhwa.
The Financial Intelligence Unit, overseeing the local financial sector, has also received similar complaints and initiated an investigation into Wemade, Munhwa reported. In response to the allegations, Wemade’s WEMIX team issued an official statement asserting that PNIX DEX and Play Wallet services are exempt from compliance requirements.
The statement clarified that Play Wallet operates as a decentralized service wherein the team lacks control over users’ private keys or assets. Additionally, PNIX serves as a decentralized trading platform, merely facilitating buy and sell orders with assets stored in smart contracts beyond the operator’s control.
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