Ex-Wemade CEO indicted for fabricating Wemix token data

South Korean prosecutors have indicted former Wemade CEO Chang Hyun-guk for allegedly falsifying and concealing details about the circulation of Wemix tokens.

Korean prosecutors have indicted Chang Hyun-guk, the former CEO of gaming company Wemade, on charges of fabricating and withholding information regarding the circulation of Wemix tokens, linked to the company.

The indictment, announced on Monday, Aug. 5, accuses the former Wemade chief executive of deceiving investors by failing to disclose substantial sales of Wemix tokens despite his February 2022 promise to cease such sales and provide transparency on circulation data, Korea JoongAng Daily reports.

The legal action follows nearly a year after Wemix investors first brought the issue to court in May 2023. Founded in 2000, the Korean gaming giant first started issuing Wemix tokens in 2020 to support its play-to-earn video games. The company reportedly sold 108 million tokens between November 2020 and November 2021, generating approximately ₩290 billion (over $210 million) in profits. Subsequently, the company pledged to halt further token sales and disclose circulation data, the report reads.

Wemade continue selling tokens

However, Korean prosecutors allege that Wemade still continued to sell Wemix tokens worth ₩300 billion won between February and October 2022 without meeting disclosure requirements. The company is also suspected of using these tokens to invest in external funds and secure loans by providing Wemix as collateral, the report reads.

As a result of these actions, Wemix was delisted by the Digital Asset eXchange Alliance, comprising Korea’s top five crypto exchanges, due to regulatory concerns. However, the token was re-listed after Wemade clarified it was no longer selling the token on the market. Chang Hyun-guk, who stepped down as CEO in March, remains Wemade’s vice president.