'Wemix Liquidity' Sharp Debate... "Price Manipulation" vs "Initial Business Fund Acquisition"

Prosecutors: "Announced Supply Reduction as Intentional Price Manipulation"

Jang Hyun-guk: "Securing Business Funds... An Inevitable Choice"

The 4th trial of Jang Hyun-guk, former vice chairman of Wemade (currently Nexus CEO), who was indicted for allegedly concealing Wemix liquidity and manipulating Wemade's stock price, was held on the 24th. In the trial, a fierce debate ensued between the prosecution and the defendant, Jang, over whether Jang continued liquidity despite Wemade's declaration to halt the cashing (liquidation) of the virtual asset 'Wemix' issued in January 2022.

300 Billion Cash After "Liquidity Halt"

The prosecution pointed out that only the distribution method of Wemix changed, but the actual supply and cashing were still under Jang's control. They claimed that even after Jang declared in January 2022 that "Wemix liquidity would be halted," more than 16 million Wemix were distributed indirectly through the 'Eco Fund' created in cooperation with the virtual asset financial company 'Hyperithm,' a subsidiary. This amounted to approximately 300 billion won based on the market price at the time.

The main investees who received Wemix through the Eco Fund were Wemade affiliates and partner startups such as SundayToz and Round1. The prosecution noted, "These companies cashed out Wemix in the market through Hyperithm immediately after receiving it as an investment, and this cash flow was a structure that Jang was aware of in advance."

The prosecution argued that if the supply of Wemix decreases, its scarcity is highlighted, leading to a rise in price, which directly correlates with the increase in Wemade's asset value and stock price. They emphasized that Wemix is a core asset created by Wemade to build a blockchain game ecosystem, and news of supply control acted as an important signal in the stock market. The prosecution stressed that using this structure to send misleading messages to investors was "a typical act of price manipulation."

Inevitable Fund Acquisition... "Information Was Transparently Disclosed"

Jang and his legal team, who conducted witness questioning that day, directly refuted the prosecution's price manipulation claims, stating, "Wemix distribution was strategic fundraising for ecosystem building, and investors were never deceived."

Jang argued, "The 'liquidity halt' announced in January 2022 meant that we would not directly sell and cash out on virtual asset exchanges like Upbit or Bithumb," and "Hyperithm was an independently operated asset management company, and Wemix distribution through it was part of a strategy to expand the platform ecosystem."

He explained, "Wemix is not just a virtual asset but a blockchain-based currency connecting items and resources between games, and expanding its use and securing initial funds were essential to create a game ecosystem centered around it." He particularly emphasized, "Wemade was pioneering a P2E (Play to Earn) based blockchain game platform like 'Mir4,' which was rare worldwide at the time, and securing numerous participating game companies and users was necessary to operate this ecosystem."

At the time in 2022, Wemade affiliates and investees such as SundayToz operating in the Wemix ecosystem were in urgent need of marketing and operating funds to attract users. Former Vice Chairman Jang explained that each company had no choice but to liquidate Wemix to quickly secure funds based on their own judgment.

Jang added, "Wemade has never intervened in Wemix distribution after the 'liquidity halt' declaration," and "The details of Wemix usage were transparently disclosed multiple times in quarterly reports, investor meetings, and conference calls, and there was no concealment or distortion."

"Innovation Failure Should Not Become a Crime"

In his final statement, Jang appealed that the Wemix project, an innovation attempted in a regulatory vacuum, should not lead to criminal punishment.

Jang argued, "Wemix was a core asset for building Wemade's blockchain ecosystem," and "It was not just simple liquidation, but legitimate transactions with companies participating in the ecosystem, which is a structure common in all blockchain coin businesses worldwide."

He continued, "In fields where technology moves faster than regulations, like AI and blockchain, there is no choice but to try first and communicate the results with the market," and "If it becomes a target for criminal punishment simply because 'the results were not good,' no new technology can take root in the Korean market in the future."

The court concluded the trial that day and set the sentencing date for July 15 at 2 p.m.

Reporter Hee-won Jeong tophee@hankyung.com