- South Korean prosecutors are investigating WeMade for potentially violating crypto regulations by withholding private keys from users.
- WeMade claims their services are decentralized and they don’t control user’s private keys, so they are exempt from regulations requiring registration as a virtual asset business.
- South Korea’s Financial Intelligence Unit is also investigating WeMade for similar allegations of non-compliance with crypto regulations.
South Korean Web3 game developer WeMade is currently under investigation by local prosecutors for potentially violating crypto regulations. The prosecutors are examining if WeMade withheld private keys from users, which would mean they violated reporting rules.
In response to the allegations, WeMade has stated that their Wemix wallet services are decentralized, and they do not control users’ private keys. They claim this means they cannot engage in virtual asset activities like custody, transfer, or exchange. Therefore, they are exempt from regulations requiring registration as a virtual asset business.
WeMade also said their Phoenix DEX platform merely facilitates individual transactions between users. Assets are stored in smart contracts beyond their control. Thus, they believe Phoenix is exempt as well.
South Korea’s Financial Intelligence Unit has also begun investigating WeMade based on similar allegations of non-compliance. WeMade remains under scrutiny as prosecutors determine if it violated regulations by not registering with authorities and withholding private keys from wallet users. The investigations are ongoing.