South Korean web3 gaming giant Wemade, valued at $1.2 billion, is currently facing an investigation by local authorities for potentially evading registration governing governing virtual asset service providers.
The probe stems from accusations that Wemade, through its affiliated decentralized exchange (DEX) PNIX and digital wallet Play Wallet, evaded mandatory registration requirements by withholding private keys from users.
South Korean regulations generally require crypto service platforms to register, but some decentralized offerings are exempt if users retain control of their private keys.
Wemade argues that both PNIX and Play Wallet fall under this exemption, but prosecutors are skeptical.
They are investigating whether these services actually deny users access to their private keys, effectively contradicting Wemade’s claim and violating reporting obligations.
The Financial Intelligence Unit, overseeing the financial sector, is also probing Wemade based on similar complaints.
Wemade, on the other hand, insists both PNIX and Play Wallet operate as truly decentralized entities, with users holding their own keys and the team has no central control over users’ assets.
The statement further explains that transactions that are being processed are held in smart contracts, and not by the team.
This comes as South Korean authorities recently launched a probe into global crypto exchange OKX, accusing it of operating without license and promoting its services to South Korean users