The South Korean game maker WeMade crypto project suffered a blow on February 8 as regulators launched a probe into suspected “unregistered” sales on WEMIX platforms.
Maeil Kyungjae reported that the Financial Intelligence Unit (FIU), which reports to the Financial Services Commission, is spearheading the investigation.
WeMade Crypto Platform ‘Not Registered’ with Authorities?
The FIU received a tip-off about WeMade’s WEMIX platform from the Digital Asset Exchange Association (DAXA)’s Joint Advisory Group.
DAXA is a group of five registered domestic crypto exchanges. The body comprises the market leader Upbit, as well as Bithumb, Coinone, Korbit, and Gopax.
In December 2023, DAXA announced that it would begin working with regulators such as the FSC and the FIU.
The bodies pledged to help identify unregistered exchanges and sales channels by asking the public to submit tip-offs about unlicensed crypto service providers.
South Korean law stipulates that all virtual asset service providers (VASPs) – including wallet providers – must obtain permits to operate in the nation.
This rule applies not only to South Korea-based firms, but also to companies based overseas who target South Korean nationals.”
DAXA told the FIU that the WEMIX platform offers crypto “wallet services” “without reporting” its activities.
WEMIX coin prices over the past seven days. (Source: CoinGecko)
WeMade in Regulatory Crosshairs?
While WeMade has no shortage of overseas subsidiaries, the firm and its WEMIX coin have attracted considerable interest from domestic investors.
DAXA’s data comes from reports submitted by members of the public. The body then reviews these reports and submits them to the FIU.
Kim Joo-hyun, the Chairman of the South Korean Financial Services Commission. (Source: MBC News/YouTube)
The media outlet reported that “suspicions conveyed to the FIU” are that WEMIX is “conducting undeclared business” with its PLAY WALLET and PNIX DEX services.
What Crypto Services Does WeMade Platform Offer?
PLAY WALLET is a wallet that supports the in-game currencies of all the games in the WEMIX ecosystem.
It provides a function whereby players can convert in-game currencies to WEMIX coins. As major crypto exchanges (including most DAXA members) list WEMIX tokens, this means that gamers can, the reports claim, indirectly trade their in-game currencies for fiat.
South Korean law allows wallet providers to store tokens and private keys. But if these providers also allow users to make exchange or sale functions, they must apply for operating permits.
Crypto-keen Game Maker Looks for Global Adoption
The WEMIX DEX, meanwhile, is supposedly a “decentralized exchange” that lets users “check asset statuses at a glance” and “check the liquidity and price trends of digital assets.”
However, the reports claim that this service also violates “undeclared coin exchange” rules.
South Korea Imposes Stricter Punishments For Crypto Trading Offenses
South Korea’s financial regulators have slated July 19 to implement the Virtual Asset User Protection Act and the Virtual Asset Industry Supervision Regulations.#CryptoNews #Koreahttps://t.co/86CkQkULFj
— Cryptonews.com (@cryptonews) February 7, 2024
The media outlet explained that the South Korean “virtual asset industry” would be “paying close attention to the decisions the FIU will make in the future.”
Unnamed industry sources claimed there was a “possibility that trading in WEMIX” could be “suspended” if the FIU rules against the game maker.
WeMade and its WEMIX token have had a decidedly mixed relationship with South Korean exchanges and DAXA.
DAXA ruled that its members should delist the coin in December 2022. However, with the exception of Upbit, all of the body’s members have since either listed or relisted WEMIX.
The Spanish crypto exchange Bit2Go listed WEMIX on its platform this week, as the firm looks for wider overseas adoption for its coin.
On February 7, DAXA also reported the trading platform OKX for allegedly targeting South Korean citizens without an operating permit.
WeMade, the maker of the hit Legend of Mir series, this week disclosed net losses of $142.6 million for the fourth quarter of FY2023.
South Korean prosecutors are appealing a court ruling that cleared Samsung Executive Chairman Jay Y. Lee of all charges earlier in the week https://t.co/oJfniX6H8O
— Bloomberg (@business) February 8, 2024
The WeMade crypto pivot began around half a decade ago when the firm first spun off, then reincorporated, a dedicated blockchain gaming arm.
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