Wemade CEO Acquitted in WEMIX Token Manipulation Case

A South Korean court has acquitted Jang Hyun-guk, the former CEO of blockchain gaming firm Wemade, of charges related to the manipulation of the WEMIX crypto token's circulation. The Seoul Southern District Court ruled that Jang did not intend to influence crypto market prices using deceptive means, thereby clearing him of violating the country’s capital market laws. This verdict marks a significant legal victory for Jang, who is now employed at blockchain gaming company Nexus.

The legal proceedings against Jang began nearly a year ago, with prosecutors alleging that he had falsely announced a halt in liquidation for WEMIX tokens to stabilize prices and induce investor confidence. However, the court found no clear evidence of intent to manipulate the market. Jang was indicted on charges of fabricating and omitting information about the actual circulating supply of WEMIX tokens, as well as deceiving consumers and failing to disclose token sales despite promising to stop selling tokens in February 2022.

Prosecutors claimed that under Jang’s leadership, Wemade unfairly sold over $200 million in WEMIX tokens in the market from February to October 2022, without complying with the disclosure requirements of South Korea’s Capital Markets Act. The company allegedly used the tokens to invest in external funds and receive stablecoin loans, using Wemix as collateral. In response to these controversies, the Digital Asset eXchange Alliance, a trade group comprised of South Korea’s largest exchanges, delisted the WEMIX token in December 2023, after the Seoul Central District Court approved the move.

The controversy involving Jang has significantly impacted investor confidence in the Wemade project. The WEMIX token now trades at $0.61, a 97% decrease from its all-time high of $24.71 on Nov. 21, 2021. Despite the verdict, prosecutors have the option to file an appeal to a higher court if they disagree with the ruling.

In addition to the court case, the WEMIX token has faced another controversy involving allegations of a cover-up after a major crypto hack. On Feb. 28, over 8.6 million tokens were withdrawn due to an attack on the blockchain gaming platform’s Play Bridge Vault. The hack resulted in more than $6 million in crypto losses. The company disclosed information days later, leading to allegations of a cover-up. However, Wemix Foundation CEO Kim Seok-hwan stated that the company had no intention of concealing the attack, and the announcement was delayed to avoid causing panic in the market because of the stolen assets. Despite Kim’s attempts to calm the markets, the token’s price plummeted almost 40% days after the attack.