The prosecution investigating fraudulent and unfair trading related to the virtual asset 'Wemix (WEMIX)' has non-detained indicted Jang Hyun-guk, Vice Chairman of Wemade, on the 5th. This comes about 14 months after the forced investigation, including a search and seizure of Wemade's headquarters in June last year.
The Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Kim Su-hong) announced that Vice Chairman Jang and the Wemade corporation were non-detained indicted on charges of violating the Capital Markets Act.
Wemade issued Wemix coins in October 2020 and listed them on virtual asset exchanges. After the price surged sharply, in 2021, Wemade liquidated approximately 290 billion KRW worth of coins it held and used the funds as business capital.
When this fact became known externally and the price plummeted, around January to February 2022, Vice Chairman Jang (then CEO) announced that he would stop liquidating Wemix coins. This was to defend the Wemix coin price and Wemade's stock price. However, this was false, and it was revealed that Wemade continued to sell Wemix coins to liquidate them and used the funds for investments such as fund capital.
Due to excessive liquidation by the issuer Wemade, the circulation volume of Wemix coins exceeded the planned circulation volume initially submitted to the exchanges, and eventually, around December 2022, the coins were delisted from the five major exchanges.
The prosecution viewed that during this process, Vice Chairman Jang, who held Wemade stock options at the time, was in a situation where he had to defend the decline in Wemade's stock price and Wemix coin price to exercise his options. In other words, they applied the Capital Markets Act violation on the grounds that Jang personally gained profits by preventing the decline of Wemix coin and Wemade stock prices. However, the prosecution did not specify the amount of illegal profits obtained by Jang.
Regarding the Wemade corporation, it was judged that then-CEO Jang used deception with the intent to manipulate Wemade's stock price fluctuations through such fraudulent methods, and the same Capital Markets Act violation charges were applied.
In relation to this case, there were differing interpretations in the legal community regarding the recognition of the 'securitization of the coin.' However, the prosecution explained that although the Capital Markets Act violation charges were applied to Vice Chairman Jang and Wemade corporation, this was based on criminal facts such as managing Wemade's stock price and did not recognize the coin as a security.
A representative of the Southern District Prosecutors' Office said, "In stock and virtual asset markets where information asymmetry is severe, it is necessary to hold strict accountability for acts that undermine investors' trust for the company's benefit," adding, "We will respond firmly to financial and securities crimes that damage the fairness and trust of the capital market."
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