South Korean Web3 game developer Wemade under investigation for potential circumvention of crypto regulations
South Korean Web3 game developer, Wemade, is currently being investigated by local prosecutors over allegations of unfair profits resulting from potential circumvention of rules that require virtual asset service providers to register with authorities. According to South Korean regulations, crypto service platforms must register and report, unless they do not share control over user assets by providing private keys.
Investigation focuses on hidden private keys
The investigation is specifically looking into whether Wemade’s decentralized exchange (DEX) PNIX and its Play Wallet digital asset storage system were hiding private keys from users. Wemade argues that since it initially entered the market as a game developer and later issued its own tokens, it is not required to comply with reporting requirements.
Wemade team responds to allegations
“Naturally, involvement in the custody or operation of assets stored in the wallet is technically blocked, so it is judged that it is not a service subject to reporting by virtual asset business operators.”
Wemade team
The Wemade team has responded to the allegations by stating that PNIX DEX and Play Wallet services are not subject to compliance requirements. However, last June, the 1st Financial Crimes Investigation Department of the Seoul South District Prosecutor’s Office launched an operation against WeMade following complaints from investors accusing the company of fraud and misuse of funds.
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