Ex-CEO of Wemade indicted for failing to disclose cryto data

Finance

Ex-CEO of Wemade indicted for failing to disclose cryto data

Published: 06 Aug. 2024, 18:29

CHO YONG-JUN
cho.yongjun1@joongang.co.kr

Wemade's former CEO Chang Hyun-guk during an interview with the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily [JOONGANG ILBO]

Prosecutors indicted a former CEO of Wemade, a controversial Korean gaming outlet, on Monday for allegedly fabricating and omitting information about the amount of its circulated cryptocurrency.

Chang Hyun-guk is accused of deceiving consumers by failing to disclose sales of Wemix tokens despite promising to stop selling them in February 2022 and disclose circulation data.

The prosecution's decision comes almost a year after Wemix investors first took the issue to court last May.

Wemade began issuing Wemix in 2020. The currency is linked to the publisher's so-called Play to Earn video games, in which players can purchase in-game content and items using Wemix but also sell in-game items for the cryptocurrency, which can subsequently be converted into real-world currencies.

It was revealed in January 2022 that Wemade made an estimated 290 billion won ($210.6 million) in cash on the market from November 2020 to November 2021 from selling 108 million tokens, around 10 percent of the maximum supply of 1 billion tokens set by the game developer.

Wemade clarified in February 2022 that the unloaded assets were used to acquire SundayToz, the developer behind the hit mobile game Anipang that is now known as Wemade Play, and promised that they would stop raising funds by selling the cryptocurrency. The company also pledged to publish circulation data of the Wemix tokens.

Prosecutors allege that Wemade unfairly sold Wemix coins worth 300 billion won in the market from February 2022 to October 2022 without publishing the required disclosure, violating the Capital Markets Act. The company is suspected of using the tokens to invest in external funds and receive loans in stable coins after providing Wemix as a collateral.

Wemix was subsequently delisted by the Digital Asset eXchange Alliance, a trade group representing Korea’s five largest crypto exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — in December 2023 after the Seoul Central District Court approved the move, saying that the crypto assets have no regulator or absolute means to determine their price.

The cryptocurrency was re-listed on multiple exchanges back in February after the game publisher explained that it was not selling its coin on the market.

Chang stepped down as the CEO of Wemade in March. He is currently the company’s vice president.

BY CHO YONG-JUN [cho.yongjun1@joongang.co.kr]