South Korean game developer WeMade counters fraud allegations by the Seoul Southern District Prosecutors, asserting compliance exemptions for its digital asset systems and Phoenix DEX amidst regulatory investigations.
WeMade, a South Korean Web3 game developer, has emphatically denied allegations of coin over-issuance fraud. These accusations were brought forward by the Seoul Southern District Prosecutors’ Office, which has been investigating the company for potentially circumventing regulations and making unfair profits. WeMade’s defense centers around its digital asset storage system and decentralized exchange, Phoenix DEX, claiming they are exempt from compliance requirements that mandate registration with authorities for virtual asset service providers.
The company argues that its services, including the Play Wallet and PNIX DEX, operate outside the regulatory framework requiring control over user assets via private keys. WeMade maintains that its wallet services are decentralized, asserting that it does not control personal encryption keys and, therefore, is not engaged in activities necessitating regulatory reporting for virtual asset transfer, storage, or exchange.
This ongoing investigation has put WeMade under considerable scrutiny, given its pivotal role in the Web3 and blockchain gaming sectors. Notably, WeMade is renowned for its Legend of Mir series and had ambitious plans for integrating blockchain technology into its gaming ecosystem. The company’s strategy notably includes the WEMIX token and the development of a blockchain mainnet aimed at supporting play-to-earn (P2E) functionalities across a wide range of games.
WeMade’s challenges have been compounded by previous controversies, including issues leading to the delisting of WEMIX tokens from major South Korean crypto exchanges. Allegations of unauthorized fund liquidation and fraudulent disclosure practices have been significant factors in these developments.
Despite these hurdles, WeMade has expressed its intention to continue challenging what it perceives as unjust treatment by regulatory bodies and certain market participants. The company has taken legal steps, including appealing court decisions and filing complaints with regulatory authorities, to fight for its vision of integrating blockchain technology into the gaming industry.
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