South Korean game developer WeMade is fighting fraud charges from Seoul’s Southern District prosecutors, claiming compliance exemptions for its digital asset systems and Phoenix DEX amid regulatory investigations.
WeMade, a South Korean Web3 game developer, has vehemently denied allegations of coin overprinting fraud. These charges were brought by the Seoul Southern District Prosecutor’s Office, which is investigating the company for potentially circumventing regulations and obtaining unfair profits. WeMade’s defense centers around its digital asset storage system and decentralized exchange, the Phoenix DEX, arguing that they are exempt from compliance requirements that require registration with authorities for virtual asset service providers.
The company claims that its services, including Play Wallet and PNIX DEX, operate outside the regulatory framework requiring control of user assets through private keys. WeMade maintains that its wallet services are decentralized, claiming that it does not control private encryption keys and is therefore not engaged in activities requiring regulatory reporting for the transfer, storage or exchange of virtual assets
This ongoing investigation has placed WeMade under significant scrutiny given its key role in the Web3 and blockchain gaming sectors. Notably, WeMade is known for its Legend of Mir series and had ambitious plans to integrate blockchain technology into its gaming ecosystem. The company’s strategy includes in particular the WEMIX token and the development of a blockchain core network aimed at supporting play-to-earn (P2E) functionalities in a wide range of games.
The challenges facing WeMade are compounded by previous controversies, including issues leading to the delisting of WEMIX tokens from major South Korean crypto exchanges. Allegations of unauthorized liquidation of funds and fraudulent disclosure practices are important factors in these developments.
Despite these hurdles, WeMade has expressed its intention to continue challenging what it perceives as unfair treatment by regulators and some market participants. The company has taken legal steps, including appealing court rulings and filing complaints with regulators, to fight for its vision of integrating blockchain technology into the gaming industry.
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