Wemade, a South Korean Web3 game developer with a market capitalization of 1.6 trillion Korean won ($1.2 billion), is under investigation by local prosecutors, according to South Korean news reports.
The investigation centers on allegations of unfair profits through potentially evading regulations that require virtual asset service providers to register with authorities, local news outlet Munhwa reported Thursday.
South Korean regulations mandate registration and reporting by crypto service platforms, except for those not sharing control over user assets by providing private keys. Wemade, which started as a game developer but has transitioned to issuing its own token (
WEMIX
-3.34%
) and blockchain mainnet, has insisted that the company is not subject to reporting requirements.
Prosecutors are reportedly examining whether Wemade-affiliated decentralized exchange, PNIX, and its digital asset storage system, Play Wallet, withhold private keys from users. This probe aims to determine if PNIX and Play Wallet services violate the mandate by avoiding reporting duties required for platforms that do not grant users private keys, according to Munhwa.
The Financial Intelligence Unit, the local financial sector’s supervisor, also received similar complaints and launched an investigation on Wemade, Munhwa reported.
Wemade’s WEMIX team responded to the allegations in an official announcement Thursday afternoon in Asia, where it said that PNIX DEX and the Play Wallet services are not subject to the compliance requirements.
The statement said that the Play Wallet is a decentralized service where the team does not have control over users’ private keys or assets. The team added that PNIX merely provides a decentralized trading platform that processes buy and sell orders where assets waiting for transactions are stored in smart contracts outside the operator’s hands.
The statement did not explicitly specify whether the two services have been offering users with private keys.
The Block has reached out to Wemade and the prosecutor’s office for further comments.
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