Upbit's decision to delist WEMIX ridiculous, WeMade CEO says

South Korea’s five major cryptocurrency exchanges said on Nov. 24 they will delist WEMIX, Kosdaq-listed game developer WeMade Co.’s crypto, from Dec. 8. WEMIX’s market capitalization, 517 billion won ($389.9 million) as of 6 p.m. local time on Thursday, has plunged by around 70% since the announcement.

Korea’s Digital Asset eXchange Alliance (DAXA), a trade group of Upbit, Bithumb, Coinone, Korbit and Gopax, said it found a significant difference between the planned number of tokens that WEMIX has notified the association of and the actual number traded in the market.

There were several errors in WEMIX’s explanatory materials and it will be difficult to rebuild trust in the cryptocurrency, DAXA added.

Launched in October 2020, WEMIX is listed on all DAXA crypto exchanges excluding Gopax.

The alliance put WEMIX on the investment warning list on Oct. 27 for “false disclosure,” citing that 314.3 million tokens were traded on the market, 29.5% more than the 246 million tokens that WEMIX declared in a plan previously filed to the crypto association.

WeMade was also criticized for its irresponsibility in financial disclosure in 2020. It made a transaction without a pre-notification to investors at the time, selling off 108 million tokens for 227.1 billion won.

The game developer also didn’t disclose the number of WEMIX it used as collateral for loans from WeMade’s subsidiaries and stablecoin platform Kocoa Finance earlier this year. Stablecoins are cryptos pegged to reference assets such as fiat money or exchanged-traded commodities.

The transaction is said to be similar to Bahamas-based crypto exchange FTX’s. FTX, which filed for bankruptcy this month, expanded its business by dumping its crypto FTT to subsidiary Alameda Research. Alameda took out loans by using the dumped crypto as collateral to acquire additional FTX.

LEGAL ACTION AGAINST DECISION

DAXA’s decision was made unfairly by Upbit, operated by Dunamu Inc., said WeMade CEO Chang Hyun-kuk in an online press conference on Friday.

“Upbit is the only crypto exchange to which we have filed a trading plan,” he added.

Upbit hasn’t responded to WeMade’s request for clear standards and guidelines on the number of tokens traded, as well as more information needed for the explanatory materials, the CEO said.

He insisted that Upbit has treated WEMIX absurdly, citing many cryptos listed on Upbit without any trading plan.

“Some from Upbit's management posted a news report on the delisting on an Instagram account even before DAXA’s official announcement. This is very ridiculous, too,” he added.  

Chang said WeMade will take legal action against DAXA’s decision, presenting various evidence as well as emails, telegram messages and video conference records with DAXA. WeMade has no plan to develop a new digital asset despite the crypto exchange association's decision, he noted.

Write to Jin-Woo Park, Sang-Eun Lee and Min-Kyung Shin at jwp@hankyung.com
Jihyun Kim edited this article.