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South Korean Web3 Giant Wemade, Under Review! As a development that makes waves in cryptocurrency and gaming communities, South Korea’s leading Web3 game developer, Wemade, is placed at the center of a legal review. With a market value of 1.6 trillion Korean won (approximately $1.2 billion), the company is reportedly under intense scrutiny by local prosecutors, according to South Korean news sources.
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The focus of the review is unjust profit claims related to evasion of regulatory requirements. According to the local news source Munhwa, Wemade is suspected of evading regulations of virtual asset service providers that are required to register with authorities.
South Korean regulations require crypto service platforms to record and report their activities, but there are exceptions for platforms that do not provide users with private keys, enabling control over the asset. Originally gaining prominence as a game developer, Wemade later ventured to create its own token (WEMIX) and blockchain Mainnet, and therefore argues that it is not obligated to comply with these reporting requirements.
South Korea Web3 Giant
Prosecutors are investigating whether the decentralized exchanges PNIX and digital asset storage system Play Wallet affiliated with Wemade comply with regulatory standards. In particular, investigators are trying to determine whether PNIX and Play Wallet services are dodging reporting obligations required for platforms that do not provide users with private keys, according to Munhwa.
Adding another layer to the review, the Financial Intelligence Unit, the local financial sector’s regulator, has also reportedly received similar complaints and initiated an independent investigation on Wemade, as reported by Munhwa.
In response to these allegations, Wemade’s WEMIX team published an official announcement stating that PNIX DEX and Play Wallet services are not subject to compliance requirements. The statement clarified that Play Wallet is run as a decentralized service that does not enable the team to control users’ private keys or assets. Also, the team emphasized that PNIX operates as a decentralized trading platform that only processes trading orders and assets are stored in smart contracts outside of the operator’s reach.
However, despite these claims, the statement did not clearly indicate whether or not these two services provide users with private keys, leaving question marks in the ongoing invvestigation.
This evolving situation highlights the complex interaction between evolving Web3 technologies, regulatory frameworks, and the rising crypto landscape. As authorities scrutinize Wemade’s operations more closely, the outcome of the investigation will undoubtedly resonate in the crypto and gaming industries, shaping future regulatory dynamics and market sentiment.