Exemption from WeMade claims
South Korean Web3 game developer WeMade has denied allegations of excessive coin fraud by the Financial Investigation Division of the Seoul Southern District Prosecutor's Office.
In an official announcement on February 8, the group responsible for Wemade's Wemix (WEMIX) token said that the digital asset storage system Play Wallet and WeMade-affiliated decentralized exchange PNIX DEX are exempt from the requirements for virtual registration with the authorities of asset service providers.
WeMade is under investigation by South Korean prosecutors on suspicion of unfair profits for violating regulations that require virtual property service providers to register with authorities, local news reports said.
Position Regarding Reporting of Certain Services in the Wemix Ecosystem as Virtual Asset Trading Operators: All services provided by Wemix are subject to the Special Financial Information Act of the Republic of Korea, including Virtual Asset Trading Operators (VASPs) in surrounding countries. The world and high compliance to report them to Wemix-related businesses and services to comply with regulations… pic.twitter.com/afVyeZ4hnE
— WEMIX (@WemixNetwork) February 8, 2024
According to South Korean law, crypto service platforms must register and report user assets unless they are controlled by private keys. WeMade requests an exemption from reporting requirements.
Prosecutors are also investigating whether Wemade's PNIX decentralized exchange and Play Wallet digital asset storage system withheld private keys from users. This inquiry seeks to determine whether PNIX and Play Wallet services have violated mandatory reporting obligations for platforms that do not provide users with private keys, as reported by Munhwa.
Related: Wemix blockchain to end verification rewards
Wemade stated that all wallet services from the Wemix group are decentralized and the group does not control private encryption keys. Therefore, you may not engage in the transfer, storage or exchange of virtual property. Because they are not technically involved in asset protection, it is considered a non-reportable service by virtual asset trading operators.
The Wemix team further stated that in the Phoenix DEX instance, it is only used to post buy and sell proposals and facilitate transactions. Assets are stored in smart contracts that are outside the control of the business operator. Therefore, virtual assets are exchanged between users through private transactions.
It is said that the Financial Intelligence Unit, which oversees the domestic financial sector, has launched an investigation against Wamade following similar complaints.
On December 22, Wemix's parent company, Wemade, launched a $100 million Web3 fund in partnership with Singaporean venture capital fund Whampoa Digital to invest in digital assets projects in the Middle East.
Wemade is the creator of the popular Legend of Mir series and claims that Mir 4, released in 2021, was the most successful blockchain game at the time.
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