The court sees insufficient proof of manipulation
Token value drops over 95% in months
Delisting from exchanges follows a judicial decision
In the high-profile WEMIX market manipulation case, a South Korean court has concluded irrevocably that the former CEO of Wemade was cleared of charges related to the creation of deceptive market signals and the concealment of token distributions.
The ruling, which was pronounced by the Seoul Southern District Court, terminates a 12-month legal battle that has rocked the crypto industry in the country and the entire global investment community. The court’s finding that there was no evidence to suggest the ex-CEO had intended to manipulate markets was first reported by News1.
Source – CMC
The WEMIX blockchain coin, which is at the heart of the problem, has seen a depreciation of 97% since the scandal emerged. Its current price is 0.61, which is a plunge compared to its highest price of 24.71, late in 2021. This price crash escalates the anxiety of investors, particularly because South Korean exchanges have delisted the token.
Accusations Unfold: Token Sales, Hidden Moves, and Governance Blame
According to prosecutors, Wemade reported an inflated circulating supply and failed in its disclosure requirements as it secretly sold more than $200 million in tokens between February and October 2022. The charges also consisted of the fact that the executive falsely promised to stop the sale of the tokens, aimed at strengthening the price of WEMIX and retaining the investors, despite the decisions made internally to keep selling them.
Nonetheless, the court ruled that, “There was an absence of accurate evidence to prove the intention of the market manipulation.” The ruling underscores regulatory inadequacies and the difficulties of enforcing the CMA (Capital Markets Act) in South Korea’s unstable crypto environment.
Although Wemade and its executives were absolved of any criminal liability, they were left with fallout consequences. The Digital Asset eXchange Alliance (DAXA), which unifies the leading exchanges in the country, voted to delist WEMIX following court approval due to concerns of transparency and the safety of investors. This action reduced liquidity in the market and accelerated the fall of the token.
Fallout Beyond Court: Delisting, Scandal, and Market Crisis
The WEMIX Foundation was not able to cope with investor responses after the verdict was published. Persistent worry over disclosure protocols and a significant hack of a key blockchain platform added to the pounding. In February, it suffered a security breach that cost it $6 million, which was not disclosed publicly until days later, prompting renewed suspicion of a cover-up and an immediate 40 percent additional price decline.
The action of the court highlights the necessity of a stronger crypto regulation. As an observer of the issue, this is regarded as evidence of the insufficiency of current rules to address the rate of crypto market malfeasance, its complexity, and technicalities.
The collapse of WEMIX is a grim reminder to all investors in digital assets. Market trust will be determined by governance, transparency, and smart regulation as the South Korean economy and other world economies scramble to adjust.