Crypto Scandal: South Korea’s Ruling Party Sends Team to Wemix Issuer

On Friday, a delegation of lawmakers from South Korea's ruling People Power Party (PPP) conducted a visit to the office of Wemade, the issuer of play-to-earn (P2E) cryptocurrency, Wemix. The visit is part of an ongoing investigation into the crypto holdings of Kim Nam-kuk, a former opposition party and now-independent lawmaker, a local media source (Yonhap) reports.

Kim reportedly had about 800,000 WEMIX coins worth about six billion won ($4.5 million) in his crypto wallet between January and February 2022. The lawmaker is alleged to have withdrawn his coin holding before South Korea implemented global anti-money laundering body Financial Action Task Force's (FAFT) travel rule in March last year. The rule demands that crypto exchanges record and report personal data on transactions that exceed a certain threshold.

Prosecutors Raid Upbit and Bithumb

Previously, South Korean prosecutors said they failed at securing a warrant to examine the lawmaker’s financial records. However, prosecutors earlier in the week raided Upbit and Bithumb, two local cryptocurrency exchanges where Kim is said to have maintained his digital wallets.

On Sunday, the embattled lawmaker resigned from the main opposition Democratic Party, forcing the party to suspend their ethics inquiry and fact-finding probe into Kim's activities. In response, PPP disclosed plans to launch an internal task force to investigate the former opposition lawmaker.

In the latest news from PPP, the ruling party's special investigative team, which consists of party representatives Kim Sung-won, Yun Chang-hyun, Park Hyeung-soo, and Choi Hyung-du and a group of external experts, held a meeting with Chang Hyun-guk, the CEO of Wemade Co. The meeting was held at the crypto issuer's headquarters and sought to gather crucial information pertaining to alleged crypto transfers made by Kim.

Yonhap reported that the visit to Wemade's office was prompted by suspicions that the company may have influenced Kim through the provision of Wemix coins to him at no cost, with the expectation of enjoying his legislative support for the P2E industry. However, Chang denied the allegation, stating that his company never provided free Wemix coins to Kim through airdrops or private sales.

Furthermore, the CEO noted that it would be nearly "impossible" to deposit 800,000 Wemix coins attributed to Kim through such methods.