WeMade claims compliance exemptions amid regulatory investigation

0



South Korean Web3 game developer WeMade has dismissed allegations of coin over-issuance fraud by the financial investigation department of the Seoul Southern District Prosecutors Office.

In an official announcement on Feb. 8, the team in charge of WeMade’s Wemix (WEMIX) token said that its digital asset storage system, Play Wallet and the WeMade-affiliated decentralized exchange Phoenix DEX are exempt from compliance requirements mandating registration with authorities for virtual asset service providers.

WeMade is under investigation by South Korean prosecutors on suspicions of unfair profits by potentially circumventing regulations that mandate virtual asset service providers to register with authorities, according to a local news report from Munhwa.

Under South Korean regulations, crypto service platforms must register and report, except those without control over user assets via private keys. WeMade claims exemption from reporting requirements.

The prosecutors are also investigating whether WeMade’s Phoenix DEX and Play Wallet digital asset storage system withhold private keys from users, according to Munhwa.

Related: Wemix blockchain to cease block minting rewards

WeMade stated that all wallet services from the Wemix team are decentralized, and the team doesn’t control personal encryption keys. WeMade claims Wemix cannot engage in virtual asset transfer, storage or exchange. As it doesn’t have technical involvement in asset custody, it’s deemed a service that does not require reporting by virtual asset business operators.

The Wemix team further stated that in the instance of Phoenix DEX, it serves as a platform for posting buy and sell proposals, along with facilitating transactions. Assets are stored in smart contracts beyond Wemix’s control and exchanged via individual transactions between users.

The Financial Intelligence Unit, which oversees the South Korean financial sector, has also reportedly initiated an investigation into WeMade following similar complaints.

On Dec. 22, 2023, WeMade launched a $100 million Web3 fund in partnership with Singaporean venture capital fund Whampoa Digital to invest in digital asset projects in the Middle East.

WeMade is the creator of the popular Legend of Mir series and claimed that Mir 4, which was released in 2021, was the most successful blockchain game at the time.

Magazine: Korean crypto firm raises $140M, China’s $1.4T AI sector, Huobi battle: Asia Express