South Korean prosecutors are examining if Wemade withheld giving private keys to users, which would mean that it violated reporting rules.
Wemade, a South Korean Web3 game developer with a market capitalization of 1.6 trillion Korean won , is under investigation by local prosecutors, according to South Korean news reports.
South Korean regulations mandate registration and reporting by crypto service platforms, except for those not sharing control over user assets by providing private keys. Wemade, which started as a game developer but has transitioned to issuing its own token and blockchain mainnet, has insisted that the company is not subject to reporting requirements.
The Financial Intelligence Unit, the local financial sector’s supervisor, also received similar complaints and launched an investigation on Wemade, Munhwa reported. The statement said that the Play Wallet is a decentralized service where the team does not have control over users' private keys or assets. The team added that PNIX merely provides a decentralized trading platform that processes buy and sell orders where assets waiting for transactions are stored in smart contracts outside the operator’s hands.