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South Korean <a href="https://crypto.news/tag/Web3/" target="_blank" rel="noopener noreferrer nofollow">Web3</a> game developer Wemade is under investigation by local prosecutors.
According to <a href="https://www.munhwa.com/news/view.html?no=2024020801071230020001" target="_blank" rel="noopener noreferrer nofollow">local media</a>, the investigation concerns allegations of unfair profits resulting from potential circumvention of rules that require virtual asset service providers to register with authorities.
South Korean regulations require registration and reporting on crypto service platforms, except for those that do not share control over user assets by providing private keys.
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Prosecutors are looking into whether the Wemade-linked decentralized exchange (<a href="https://crypto.news/tag/dex/" target="_blank" rel="noopener noreferrer nofollow">DEX</a>) PNIX and its Play Wallet digital asset storage system were hiding private keys from users. <a href="https://crypto.news/tag/Wemade/" target="_blank" rel="noopener noreferrer nofollow">Wemade</a> initially entered the market as a game developer, but moved on to issuing its own tokens <a href="https://crypto.news/price/WEMIX/" target="_blank" rel="noopener noreferrer nofollow">WEMIX</a> and the main blockchain network. Therefore, the company argues that it is not required to comply with reporting requirements.
The Wemade team <a href="https://www.wemix.com/communication/wemix-dfd74ca3237d" target="_blank" rel="noopener noreferrer nofollow">responded</a>&nbsp;to the allegations by noting that PNIX DEX and Play Wallet services are not subject to compliance requirements.
<blockquote class="wp-block-quote">
 “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.” <cite>Wemade team</cite>
</blockquote>
Last June, the 1st Financial Crimes Investigation Department of the Seoul South District Prosecutor’s Office <a href="https://www.digitalasset.works/news/articleView.html?idxno=3223" target="_blank" rel="noopener noreferrer nofollow">launched</a> a large-scale operation against WeMade. The reason for the inspection was suspicion of fraud and violation of the capital markets law. The reason was a series of complaints from defrauded WeMade investors, who accused the company of fraud and misuse of funds.
Read more: <a href="https://crypto.news/gaming-wemade-whampoa-float-100-million-web3-fund/" rel="noopener noreferrer nofollow"> South Korean gaming company Wemade floats $100m web3 fund </a>

Wemade investigated for dodging reporting duties

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