WEMIX token's Korean gaming company plunges 80%

Author: W Labs

A few days ago, the already grieving South Korean crypto community was shaken again due to the FTX incident: the token Wemix from the developer of last year's hit blockchain game "Legend 4," South Korea's WeMade, plummeted by 80%. This is a must-eat melon, so I Googled some information, mainly because Wemix was jointly delisted by South Korea's five major exchanges last Thursday, the 24th:

Looking at the price chart of WEMIX on CMC, it has dropped like this, even worse than FTX:

At the same time, WeMade's stock price also plummeted by 30% on the 25th, as the limit down in the Korean stock market is 30%… What a tragic situation! Fortunately, there are basically no friends from the Korean blockchain game community in the melon field; otherwise, first the Luna incident, then FTX, and now WEMIX in just a few days. Even the most mentally resilient investors can't be treated like this!

Today's article won't delve into specific projects and models; instead, let's discuss what exactly WeMade did to be jointly resisted by the exchanges and look ahead to the industry and the future, which aligns with the theme of this series: pain points and opportunities.

(1) Digging into the WeMade Incident

Let's gossip about what problems WeMade has encountered that led to the collective ban by the five major exchanges in South Korea. After researching a lot of information, the general storyline is as follows:

1. WeMade has a history: Earlier this year, WeMade secretly sold 50 million Wemix tokens, making about $250 million. Once this news broke, it immediately caused panic selling among retail investors, and the price of Wemix dropped from 7,000 KRW to 4,000 KRW. At that time, it was probably a first offense, and the exchanges and retail investors couldn't find any obvious evidence, so they could only watch. In fact, if WeMade sold the tokens that were unlocked for the team, it wouldn't be too unreasonable, but Korean media uncovered that WeMade might have sold tokens that were supposed to belong to the ecosystem (WEMIX has a total of 1 billion tokens, of which 74% were supposed to support the ecosystem, which was originally a good long-term strategy), which is a bit unethical.

2. By October 28 this year, the five major exchanges discovered that the actual circulation of WEMIX greatly exceeded what WeMade had disclosed to them, so they marked WEMIX with an "investment warning" and required WeMade to submit relevant materials and information during the clarification period. At this time, WeMade was still quite stubborn: "No, there are always malicious people trying to harm me!"

3. On November 24, after two extensions, the five major exchanges could no longer tolerate it and decided to delist WEMIX simultaneously, citing reasons such as: significant deception regarding actual circulation, providing insufficient or incorrect information to investors, submitting erroneous data during the clarification period, and damaging market trust, etc. As a result, WEMIX dropped to only 20% of its value.

4. Even more amusingly, the CEO of WeMade held an emergency press conference that day, tearfully claiming that this was a "super bullying" incident against WEMIX by the exchanges! Unfair, unjust, and unhappy! Legal measures would be taken against the exchanges! They would apply for an injunction to demand the delisting of invalid tokens, BlaBlaBla! But he never explained why the actual circulation was so much higher than reported! You secretly sold tokens again, didn't you? That's the key!

Of course, I don't understand Korean, so the information I've gathered may not be complete, but the reports in English and Chinese are basically like this. If all of this is true, WeMade deserves to go to zero; those who return to prison are not worthy of sympathy, and the truly unfortunate ones are the investors who mistakenly trusted WeMade. However, this time the investors have been bullied severely and are starting to fight back. Media reports say that investors who suffered losses are filing criminal lawsuits against WeMade, and the Korean police have accepted the reports and complaints. The management of WeMade is now officially under investigation for "fraud."

(2) Who Owns the Legend IP?

In the previous article, we mentioned the love-hate relationship between domestic Shengqu Games and South Korea's WeMade, which stems from the "Legend" IP. I had always been unclear about the disputes surrounding "Legend" between Shengqu Games and several Korean companies, but after reviewing a lot of information, I finally figured it out. Here's a brief summary:

1. In 2001, Chen Tianqiao's Shanda Games acquired the agency rights for "Legend" from the Korean game company ACTOZ for $300,000, achieving great success in China.

2. After Shanda Games reverse-acquired ACTOZ, some of the Korean developers who originally worked on "Legend" left and formed WeMade.

3. In 2002, ACTOZ, WeMade, and Shanda Games reached an agreement: WeMade and ACTOZ were joint copyright holders of "MIR2" (Legend 2), but WeMade entrusted the rights to ACTOZ, which then exclusively granted the related copyrights of "MIR2" (Legend 2) in mainland China to Shanda Games, while WeMade retained the profit-sharing rights.

4. Originally, this matter was settled, and WeMade could just share the profits, but they were not satisfied and secretly sold the rights to "Legend" to some domestic game companies for profit. This led to years of lawsuits, during which the Singapore International Arbitration Court ruled against WeMade, but they ignored it; then last year, the Supreme People's Court of China made a final ruling (Civil Judgment No. 395), again determining that WeMade lost the case.

After sorting this out, it's clear what kind of company WeMade is: a complete deadbeat and fool! So this time, secretly selling tokens aligns with their modus operandi: treating laws and regulations as if they don't exist. Who gave you the courage? Is it Korea's Liang Jingru?

(3) Does This Industry Have a Future?

Returning to the crypto industry for a moment. After the FTX incident, major media and institutions have been reflecting: Is it really only after the tide goes out that we see who is swimming naked? Before the explosion, FTX was one of the top three digital exchanges in the world, with a reputation in the crypto circle rivaling CZ, the Jewish elite, and Wall Street darlings. FTX was once at the peak of its power. Then, an article from Coindesk and a few words from CZ led to FTX's collapse within three days, with hundreds of billions of dollars in assets evaporating. Countless investors who had funds in FTX lost everything. Now that the lid has been lifted, it turns out that FTX was basically operating as a black box, with almost zero internal controls. The explosive head and his entourage did whatever they wanted; from a distance, it seemed like he had a kingly aura, but up close, it was actually a turtle's aura.

I'm not trying to be harsh, but the FTX incident has indeed taken down many friends around me. One guy couldn't sleep for two nights after the incident, constantly watching the FTX interface, hoping that the withdrawal "requested" would succeed. Then we could only chat about life, the future, and some lost friends and things, mainly seeking psychological comfort.

I remember the last time I attended a space organized by the YouTuber "韭菜兄弟," many people mentioned that they had left the industry, and everyone felt heavy-hearted. One point discussed was that in the early stages of an industry's development, all sorts of bizarre things will happen, and the so-called norms and transparency need to be gradually established through several black swan events and cycles of bull and bear markets. I just hope that industry practitioners can consider some risks and controls from their perspective, which may allow the entire industry to evolve more steadily.

I was reminded of the introductory finance textbook "Reminiscences of a Stock Operator," which tells the story of an investor named Livermore around the 1920s. He founded the technical analysis school and made waves in the immature stock market, reportedly amassing wealth equivalent to 15% of all American assets at his peak. His most successful move was shorting during the 1929 global financial crisis. After several ups and downs, Livermore went bankrupt and committed suicide out of love. Afterward, the U.S. government gradually began to implement management methods for the stock market, leading to the emergence of value investing schools like Buffett's. Because without regulations to ensure the transparency and accuracy of information, how could Buffett analyze valuable companies? The data given to you would all be false.

Coincidentally, seven years ago, Liu Qiang, the author of "The Great Futures Operator," did not survive the 2015 stock market crash and jumped from a high building in Beijing. Later, government departments began to regulate futures companies and establish rules.

The current crypto circle is just like the early days of the financial industry mentioned above, filled with various legends of getting rich, accompanied by risks that exceed people's psychological tolerance. I have always believed that the so-called decentralization of blockchain seems to contradict the need for centralized actions like regulation and norms, but the blockchain industry does need regulations and oversight. A bloody market filled with fraud and black box operations is destined to fail to attract a large number of mainstream investors and users.

Crisis is crisis; only when there is danger can there be opportunity. The recent delisting of WeMade by the exchanges and the lawsuits from investors will at least serve as a warning to other malicious project parties: deceptive behavior of secretly selling tokens and brazenly committing crimes on a traceable blockchain will definitely be caught. Bad actors like WeMade are destined to be eliminated, but there will be more quality blockchain game projects that will emerge over time, especially in an increasingly regulated environment. We will wait and see.