Wemade Files Injunction Against WEMIX Delisting Decision
Unusual Extension of Warning Status Twice
Calls for Full Investigation of Planned vs. Actual Circulation Volume
[Asia Economy Reporter Lee Jung-yoon] A strong backlash is emerging after South Korea's top five cryptocurrency exchanges decided to delist WEMIX, a coin issued by Wemade, due to significant violations in circulation volume, errors in submitted documents during the explanation period, and damage to trust. Wemade has even filed an injunction with the court to prevent this decision. Within the coin industry, the response is that "if the listing had been maintained, fee revenue could have continued, but the decision to end trading support reflects the seriousness of the issue and the broken trust."
According to industry sources on the 29th, Wemade submitted an injunction request to the Seoul Central District Court the day before to suspend the effect of the WEMIX delisting decision against Upbit and Bithumb. Wemade is also preparing injunction requests against Coinone and Korbit, members of the Digital Asset Exchange Joint Council (DAXA), which made this decision along with the exchanges, and plans to file a complaint with the Fair Trade Commission, claiming this action constitutes illegal collusion.
The incident began when it was revealed that the actual circulation volume of WEMIX was greater than planned. Consequently, on the 27th of last month, Upbit, Bithumb, Coinone, and Korbit?DAXA members listing WEMIX?designated it as a watch-listed item. Subsequently, an explanation procedure and review process were conducted to determine the final decision on whether to end trading support. During this process, the exchanges extended the watch-list designation twice. The industry considers the two extensions "unusual." As the decision was delayed, there were even talks of hesitation or waiting to see. An industry insider said, "When a circulation plan has been submitted, a discrepancy with the actual circulation volume can directly affect the coin price, making it a matter that can lead to immediate delisting. We believe many opportunities for explanation were given."
In fact, WEMIX was called a "cash cow" for domestic exchanges. Since over 95% of its trading volume is on domestic exchanges and there are many domestic investors, maintaining the listing alone could generate fee revenue. Despite poor exchange performance due to the global exchange FTX bankruptcy and interest rate hikes, the decision to delist was made. Some voices suggest that although distrust in exchanges increased due to the Terra-Luna incident and FTX bankruptcy, causing inevitable revenue damage, the delisting decision was still made.
Furthermore, there was a cautious response to claims that the delisting decision was due to Upbit's bullying. DAXA also stated in a press release the day before, "During market monitoring, if a situation is judged to be a crisis rather than a normal market condition, it is considered a joint response matter and discussions are initiated. Regarding WEMIX, it was also judged as a joint response matter, and after designating it as a watch-listed item, the explanation period was extended twice, resulting in a total of 16 explanations over about 29 days." They added, "All member companies supporting trading of the virtual asset reached the same conclusion to end trading support according to their respective standards." Another official said, "To avoid being swayed by one side, all members equally bear DAXA's operating costs."
The WEMIX incident has also sparked opinions that a full investigation is needed to determine the discrepancies between actual circulated coins and plans. Professor Hong Ki-hoon of Hongik University's Department of Business Administration explained, "Wemade's claim that some coins have no circulation plans does not seem to be grounds to reverse the delisting. However, this incident should prompt exchanges to conduct a full investigation of coins whose circulation plans differ from actual circulation volumes."
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