Moving a step closer to a cryptocurrency gate

The suspicion over Democratic Party (DP) lawmaker Kim Nam-kook’s investment in Wemix, a cryptocurrency issued by game publisher Wemade, is growing out of control. When he reportedly withdrew 800,000 digital coins worth 6 billion won ($4.5 million) from his account in a cryptocurrency exchange shortly before the implementation last year of cryptocurrency trade in real names, the media spotlight was on the omission of Kim’s digital assets in reporting his assets to the authority, a possible conflict of interest after his proposal of a bill aimed at delaying an income tax on profits from cryptocurrency trading, and the possibility of unfair trading by taking advantage of his privileged access to business information.

Now, the suspicion goes beyond ethical issues towards the source of money for his further investment up to 1.37 million digital coins. After the media raised suspicion about where the money came from, Kim claimed that he had used the 980 million won from selling all his LG Display stocks as the seed money in the beginning and spent some of the gains to rent an apartment. However, given all the details of his reported wealth and cryptocurrency trading, his explanations are not trustworthy. Another question is why the lawmaker continued making unreasonable explanations even when anyone can check the history of his blockchain-based coin investment by tracing data.

Rep. Kim traded most of his cryptocurrencies shortly before the 2022 presidential election. At that time, Lee Jae-myung, current DP leader and then-presidential candidate of the party, also called for the legalization of cryptocurrency trading based on the so-called play-to-win (P2E) games. That has raised another question how the DP managed its campaign fund for the presidential election. Just five days after the suspicion arose, the party recommended Rep. Kim to sell his digital coins and launched an internal investigation team to calm the controversy.

The Korea Game Society has urged the prosecution to investigate all lawmakers and their aides after the rumor that P2E companies were engrossed in lobbying lawmakers to legitimize the novel trading from several years ago. Wemix ended up being delisted from major cryptocurrency exchanges last year after publicly posting wrong information on its circulation amount. Until last October, 245 million coins were supposed to be circulated, but actually 318 million coins worth 175 billion won at the time were traded.

Prosecutors suspect that a considerable share of the excess coins flowed to political circles. The question centers on where the lawmaker’s money came from. We urge the DP to find out the source of the money first before the prosecution looks into the case.