Wemix.fi, a decentralized finance platform associated with the South Korean blockchain game developer Wemade, has suspended its lending and borrowing services, despite Wemade’s significant legal victory in a $7 million token dispute.
This is an unexpected development, particularly considering Wemade’s digital assets and the regulatory scrutiny they are currently facing.
Wemix and Wemade: Price Plunge Amid Liquidation Issues
Wemade launched its Wemix platform in May 2022, introducing a stablecoin fully collateralized by USD Coin, $WEMIX. The platform showed early promise, attracting a $46 million investment from Microsoft by November 2022, with its Legend of Mir game garnering over 200 million signups.
However, Wemix.fi soon faced accusations of misrepresenting the amount of its token in circulation, leading to $WEMIX delisting from South Korea’s main cryptocurrency exchanges.
The South Korean gaming firm WeMade has lost its legal battle against the nation’s biggest crypto exchanges – who have decided to delist its wemix coin (#WEMIX).
Read more https://t.co/gpl9iI0plb
— Cryptonews.com (@cryptonews) December 8, 2022
In January 2023, following an audit, Wemade was hit with a $41 million tax bill, and by February, it faced fraud charges for allegedly failing to register and report its activities accurately.
Wemade disputed these claims, but its ongoing legal battles and regulatory scrutiny stopped its operations.
The turmoil continued in March 2023, when Wemade’s CEO, Jang Hyun-kook, resigned. Following his departure, a fork of the Wemix chain was initiated, halving Wemix issuance and introducing the Wemix Pay service and a second game token.
Additionally, a new governance mechanism was also created. Despite these innovations, the price of $WEMIX continued to decline.
The situation worsened in July 2023 when news broke that Jang had sold his shares in the company, causing $WEMIX to hit a yearly low of $0.94.
The company’s announcement on July 30 that it would suspend its lending, borrowing, and liquidation functions linked to its USD-pegged stablecoin $WEMIX, further compounded investor concerns.
The platform cited issues related to the liquidation of $WEMIX but did not provide further details.
“Due to issues related to the liquidation of WEMIX$, the lending, borrowing, and liquidation functions have been suspended. We apologize for any inconvenience caused. We will provide further notices regarding the resumption of services and additional measures,” the company’s website said.
Legal Victory in Token Dispute
Amidst these challenges, Wemade secured a significant legal victory. On July 29, the Seoul Central District Court ruled in favor of Wemade CEO Park Kwan-ho in a dispute involving 7.8 million WEMIX tokens, valued at approximately $7.31 million.
The court ordered the now-defunct virtual asset exchange GDAC to return the tokens within 30 days or face a daily fine of 3 million won.
GDAC, which ceased operations on July 16, had previously accused Park of market manipulation and money laundering. The court dismissed these allegations and cited GDAC’s inability to maintain a 100% reserve ratio.
The ruling also pointed to potential financial strain from an April 2022 hacker attack, which resulted in losses of about 20 billion won ($14.48 million).
Notably, WEMIX has recently invested in the Web3 gaming platform Elixir Games to advance digital transformation and improve global gaming experiences. As reported on March 13, WeMade is optimistic that its extensive blockchain gaming efforts are beginning to yield positive results.
Wemade has faced substantial financial challenges, including an $85.5 million loss in 2023 and a $41 million crypto tax bill earlier this year.
As of now, Wemix.fi remains in flux, with its lending services suspended and its cryptocurrency’s value significantly impacted by recent events.
The legal victory for Wemade provides a temporary respite, but the company continues to face regulatory and operational challenges.
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