On February 8, authorities dealt a heavy blow to WeMade, the South Korean gaming company involved in the crypto project, by initiating an investigation into alleged unauthorised sales on the WEMIX platforms.
The investigation is being led by the Financial Intelligence Unit (FIU), under the supervision of the Financial Services Commission, as stated by a report from Maeil Kyungjae.
WeMade Crypto Platform ‘Not Registered’ with Authorities?
The Digital Asset Exchange Association’s Joint Advisory Group tipped off the FIU regarding WeMade’s WEMIX platform.
DAXA consists of five verified domestic cryptocurrency exchanges. Upbit, the prominent player in the market, are included within the group, along with Bithumb, Coinone, Korbit, and Gopax.
In the last days of 2023, DAXA made public its commitment to liaising with regulatory authorities like the FSC and the FIU, initiating a collaborative effort.
The officials committed to assisting in identifying unauthorized cryptocurrency exchanges and sales channels by encouraging the general public to provide information on unlicensed providers in the crypto industry.
All wallet providers and other virtual asset service providers (VASPs) are required by South Korean law to acquire permits before they can operate within the country.
The application of this regulation is not limited solely to corporations located in South Korea; it also extends to international enterprises that direct their efforts towards targeting individuals from South Korea.
DAXA informed the FIU that the WEMIX platform provides cryptocurrency wallet services in a manner that exempts it from reporting its operations.
WeMade in Regulatory Crosshairs?
Despite having numerous international branches, WeMade has managed to garner significant attention from local investors with its WEMIX coin.
DAXA collects data that is derived from reports provided by individuals belonging to the public. Subsequently, these reports are thoroughly examined by the organization before being forwarded to the FIU.
According to the media outlet, suspicions have been raised and conveyed to the FIU regarding WEMIX engaging in undisclosed activities through its PLAY WALLET and PNIX DEX services.
What Crypto Services Does WeMade Platform Offer?
The WALLET PLAY offers comprehensive assistance for in-game currencies across all gaming platforms within the expansive WEMIX ecosystem.
Gamers reportedly have the opportunity to indirectly exchange their virtual in-game currencies for real money by converting them into WEMIX coins. This function allows players to utilize major crypto exchanges, including those affiliated with DAXA, to list WEMIX tokens. As a result, gamers can engage in trading their in-game currencies for fiat currency, according to the reports.
In South Korea, there is legislation permitting wallet providers to store tokens and private keys. However, if these providers offer additional services such as facilitating exchanges or sales, they are required to obtain operating permits.
Crypto-keen Game Maker Looks for Global Adoption
The alleged WEMIX DEX operates as a decentralized platform where users can effortlessly verify the state of their assets and monitor the fluidity and price movements of their digital holdings with ease.
On the other hand, allegations state that this particular service also breaches the regulations concerning undisclosed cryptocurrency exchange.
The FIU’s future decisions are expected to be closely monitored by the South Korean virtual asset industry, according to the media outlet.
Industry insiders, who preferred to remain anonymous, asserted that the game maker might face the likelihood of temporary cessation of trading in WEMIX, provided that the FIU passes an unfavourable judgment.
The interaction between WeMade and South Korean exchanges, as well as DAXA, has been a blend of both positive and negative experiences for the WEMIX token.
In December 2022, the decision was made by DAXA to remove the coin from their listings. Nonetheless, it is worth noting that, apart from Upbit, all the members of this association have taken the initiative to either include or reintroduce WEMIX to their respective platforms.
Bit2Go, the Spanish cryptocurrency platform, recently introduced WEMIX on its exchange, aiming to expand the overseas usage of their digital currency.
DAXA announced on February 7, accusing the trading platform OKX of unlawfully focusing on South Korean nationals without possessing the necessary license.
In the fourth quarter of FY2023, WeMade, renowned for developing the immensely popular Legend of Mir franchise, announced a significant financial setback with net losses amounting to $142.6 million.
Around five years ago, the WeMade cryptocurrency transition sparked as the company established an independent division solely focused on blockchain gaming before eventually merging it back into the main organization.
Frequently Asked Questions:
Why was WeMade’s crypto project subjected to a regulatory investigation?
South Korean regulators raised concerns about potential illicit sales on WeMade’s WEMIX platforms, prompting an investigation that commenced on February 8th.
Which governing entity holds jurisdiction over the investigation and to whom is it accountable in terms of reporting?
WeMade’s crypto project is currently under investigation by the Financial Services Commission’s Financial Intelligence Unit (FIU), which is leading the efforts in this matter.
By what means did the FIU acquire knowledge of any possible abnormalities within the WEMIX platform?
The FIU has been informed by the Joint Advisory Group of the Digital Asset Exchange Association (DAXA), which comprises five nationally registered cryptocurrency exchanges.
What exactly is DAXA and what part did it play in the course of this investigation?
DAXA comprises a cluster of verified national cryptocurrency exchanges. The FIU was notified by DAXA regarding WEMIX, which was found to provide crypto wallet services without adhering to appropriate reporting protocols.
What particular services are being closely examined on the WEMIX platform?
The FIU is currently probing allegations that WEMIX might be engaged in undisclosed commercial activities through its PLAY WALLET and PNIX DEX services.
Would you kindly elucidate the range of services provided by PLAY WALLET within the WEMIX platform?
The PLAY WALLET serves as a digital wallet that facilitates the usage of in-game currencies within the WEMIX ecosystem. Its primary function revolves around the conversion of these in-game currencies into WEMIX coins.
Consequently, this innovative service indirectly empowers gamers by providing them with the opportunity to exchange their in-game currencies for real money.
What potential reasons could lead to WEMIX breaching South Korean regulations on cryptocurrency services?
Concerns arise regarding potential violations of regulations by WEMIX, as South Korean law permits wallet providers to safeguard tokens and private keys but mandates operating permits if they engage in exchange or sale activities.
Unraveling the enigma of WEMIX DEX: What are the accusations that hover over its supposed breach of regulations?
The WEMIX DEX is labelled as a decentralized exchange where users can monitor the status of assets and observe price trends. There have been reports indicating that this platform might also contravene regulations about unannounced cryptocurrency trading.
In light of the investigation’s conclusion, what are the possible implications that WeMade may encounter?
The FIU’s ruling against WeMade could potentially lead to a suspension of trading in WEMIX. The future decisions of the FIU are being closely monitored by the virtual asset industry in South Korea.
In the past, how do WeMade, DAXA, and South Korean exchanges relate to each other?
In December 2022, DAXA decided to delist the WEMIX coin for its members. Surprisingly, all the members, except for Upbit, have disregarded this ruling and listed or relisted WEMIX. The recent revelation of WeMade’s net losses further complicates its already precarious situation.