WeMade, a South Korean Web3 game developer, has rebutted allegations of coin over-issuance fraud leveled against it by the Financial Investigation Division of the Southern District Prosecutor’s Office in Seoul. According to an official announcement made on February 8 by WeMade’s Wemix (WEMIX) token team, the company's digital asset storage system, Play Wallet, and its affiliated decentralized exchange, Phoenix DEX, are not bound by the requirement for compliance with virtual asset registration with authorities.
Reports from local news outlet Munhwa suggest that WeMade is under scrutiny for purportedly circumventing regulations mandating virtual asset service providers to register with authorities, thus allegedly garnering unfair profits. However, WeMade asserts that its platforms are exempt from such reporting requirements, as they fall within the category of platforms that do not control user assets via private keys.
Prosecutors are reportedly investigating whether WeMade's Phoenix DEX and Play Wallet systems have withheld private keys from users. WeMade maintains that its wallet services are decentralized, with the team having no control over users' personal encryption keys. As per the company's claims, Wemix does not partake in the transfer, storage, or exchange of virtual assets, thereby qualifying as a service that does not necessitate reporting by virtual asset operators.
The Wemix team clarified that platforms like Phoenix DEX function as facilitators for transactions, providing buy and sell recommendations while assets are stored in smart contracts over which WeMade has no control. Transactions occur directly between users, without involvement from the company in the custody of assets.
Amidst these investigations, the Financial Intelligence Unit, responsible for overseeing South Korea's financial industry, has also reportedly initiated inquiries into WeMade following similar complaints. Additionally, on December 22, 2023, WeMade launched a US$100 million Web3 Fund in collaboration with Singaporean venture capital fund Whampoa Digital, aiming to invest in digital asset projects in the Middle East. Notably, WeMade boasts the creation of the popular Legends of Legends series, with Legends of Legends 4, released in 2021, touted as the most successful blockchain game of its time.
