Wemade Dismisses Coin Over-Issuance Fraud Claims amid Ongoing Investigations
Summary:
South Korean Web3 game developer, Wemade, has refuted allegations of coin over-issuance fraud by Seoul's Prosecutors’ Office. The firm asserts that its digital asset storage system, Play Wallet and the PNIX DEX, are not required to register with authorities as virtual asset service providers. Wemade also maintains that it does not control users’ private keys, excluding it from certain reporting obligations. It faces investigation over possibly bypassing regulations that mandate registration with authorities, while the Financial Intelligence Unit is reportedly probing Wemade for similar reasons.
South Korean Web3 game developer, Wemade, refutes claims of a coin over-issuance scandal, allegations made by the Seoul Southern District Prosecutors’ Office's first financial investigation department. A formal statement was made on Feb. 8th where Wemade's team in charge of the WEMIX token highlighted that their digital asset storage mechanism, the Play Wallet and the Wemade-associated PNIX DEX, are not bound by legal obligations mandating registration with authorities for virtual asset service providers. Local news reports indicate that Wemade is currently being scrutinised by South Korean prosecutors due to suspicions of unlawful benefits by possibly bypassing rules requiring virtual asset service providers to register with officials.
According to South Korean regulations, cryptocurrency service platforms are obligated to register and report unless they do not control user assets via private keys. Wemade, known for its evolution from game development into issuing its WEMIX token and blockchain mainnet, asserts its exemption from these reporting requirements. The investigation also encompasses assessing whether Wemade’s PNIX DEX and Play Wallet digital asset storage mechanism withhold private keys from users, in essence, determining if these services violate the requirement for reporting, imposed on platforms not offering users private keys, this according to Munhwa.
Further, Wemade stated that all wallet services offered by its Wemix team are decentralized, eliminating their control over personal encryption keys. This implies they cannot participate in the transfer, storage, or exchange of virtual assets. As their technical involvement in asset custody is non-existent, their service is not required to be reported by virtual asset business operators.
The team at Wemix added that with respect to the Phoenix DEX instance, it solely acts as a platform for setting up purchase and sale propositions while supporting transactions. Assets are held in smart contracts beyond the purview of the business operator. Thus, virtual assets are exchanged through personal transactions between users.
Running parallel to these events, the Financial Intelligence Unit, responsible for monitoring the local financial sector, has reportedly begun an investigation into Wemade followed closely by similar allegations. On Dec. 22, Wemix’s parent firm, Wemade, started a $100 million Web3 fund in collaboration with the Singaporean venture capital fund, Whampoa Digital, to inject investment into digital asset projects in the Middle East.
Wemade, regarded as the originator of the well-known Legend of Mir series, asserts that its Mir 4 game, launched in 2021, was the dominant blockchain game of its time.
Published At
2/8/2024 2:15:30 PM
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