Skip to content
  • KOSPI 2791.56 -42.73 -1.51%
  • KOSDAQ 918.57 -24.28 -2.58%
  • KOSPI200 370.88 -5.20 -1.38%
  • USD/KRW 1193.6 3.20 0.27%
  • JPY100/KRW 1,049.36 5.20 0.50%
  • EUR/KRW 1,353.54 6.78 0.50%
  • CNH/KRW 188.04 0.39 0.21%
View Market Snapshot
Cryptocurrencies

WeMade under fire for massive clandestine WEMIX cryptocurrency sale

The criticism comes after Kakao’s top executive stepped down over his heavy share sales, raising a management ethics controversy

By Jan 11, 2022 (Gmt+09:00)

Korean game developer WeMade, the creator of global MMORPG blockbuster Mir
Korean game developer WeMade, the creator of global MMORPG blockbuster Mir

WeMade Co., a South Korean video game developer, has come under criticism for the massive unnoticed selling of its cryptocurrency WEMIX, allegedly inflicting losses for retail digital coin investors.

On Monday, WEMIX fell as much as 30% on Bithumb, one of Korea’s largest cryptocurrency exchanges, as investors dumped the virtual currency on market talk that WeMade earlier sold 50 million WEMIX units worth up to 300 billion won ($251 million).

Following the massive selling, WEMIX was trading at 4,800 won apiece, down 83% from a November high of 28,000 won.

WeMade’s stock, listed on the tech-heavy Kosdaq market, also dropped 8.8% to close at 138,100 won on Monday, down 44% from a November high.

The game developer’s massive selling has invited anger from retail investors as well as industry officials.

“Big companies usually give smaller investors an alert for upcoming massive sales of their own share or coin holdings to prevent follow-up panic selling. They also have a system like a lock-up period. But apparently, WeMade doesn’t have any such systems,” said an official at a local cryptocurrency firm.

The price of WEMIX rebounded sharply on Tuesday, rising over 50% on news that the digital asset is also allowed to be traded on Upbit, Korea’s biggest crypto exchange.

The significant gain has dealt another blow to retail crypto investors, who sold WEMIX the previous day.

Wemade's Mir4, a play-to-earn game
Wemade's Mir4, a play-to-earn game

MANAGEMENT ETHICS

The controversy over WeMade’s heavy selling comes a day after Alex Young-joon Ryu, the nominee for new co-CEO of Korea's top mobile messenger app Kakao Corp., on Monday offered to step down, after his disposal of $39 million worth of shares in the fintech arm Kakao Pay Corp. met with strong backlash.

About a month after Kakao Pay’s market debut, Ryu and seven other executives of the company dumped a combined 440,000 shares in after-hours trade. The block sale drew harsh criticism from both its labor union and minority shareholders, questioning its management ethics.

As criticism against WeMade mounted, the game developer said its unloading of WEMIX was not a lump-sum sale but made over several occasions, and in line with the company’s white paper, which stipulated the possibility of massive selling.

“In the corporate white paper we issued earlier, we already said up to 74% of WEMIX that we created is at our disposal and can be used to help revitalize the domestic cryptocurrency ecosystem. We just followed that,” said a company official.

He said proceeds from the recent sale of the WEMIX coins were mostly used to buy a controlling stake in smaller domestic rival SundayToz Corp., a company known for its mobile game Anipang series.

WeMade said in late December it is purchasing a 34% stake in SundayToz for 136.7 billion won to diversify its blockchain-based game portfolio.

A gamer is looking at Wemade's Mir4, a play-to-earn (P2E) game
A gamer is looking at Wemade's Mir4, a play-to-earn (P2E) game

TO IMPROVE MANAGEMENT TRANSPARENCY

The producer of the Legend of Mir series, a free-to-play fantasy massively multiplayer online role-playing game (MMORPG), WeMade is a pioneer in Korea's play-to-earn (P2E) game industry.

Buoyed by the success of the overseas version of Mir4, its share price has skyrocketed by more than 10 times in almost two years, becoming a ten-bagger stock.

The sixth-largest company on the Kosdaq has said it will actively pursue M&As to acquire game intellectual property rights and expand the ecosystem of its blockchain platform, also called WEMIX.

WeMade has also invested 80 billion won to become the No. 2 shareholder in Vident Co., the owner of Bithumb.

A WeMade official said the company is considering ways to improve management transparency, including voluntary public disclosures when it plans to sell WEMIX in large quantities.

Write to Eui-Myung Park and Min-Ki Koo at uimyung@hankyung.com

In-Soo Nam edited this article.
Comment 0
0/300