Ex-Wemade CEO Acquitted of WEMIX Token Manipulation in First Trial

Jang Hyun-guk, former CEO of Wemade, who was indicted for allegedly manipulating the circulation of the virtual asset WEMIX during his tenure, has been acquitted in the first trial. Wemade, the company also indicted in the case, was similarly found not guilty.

On July 15, Presiding Judge Kim Sang-yeon of Criminal Division 13 at the Seoul Southern District Court delivered a not guilty verdict in the first trial of Ex-CEO Jang Hyun-guk and the corporation Wemade.

During his tenure as CEO of Wemade in early 2022, Jang was accused of falsely announcing a halt to the liquidation (i.e., cashing out) of WEMIX coins, while secretly offloading approximately KRW 300 billion worth of WEMIX. The move was allegedly aimed at boosting Wemade’s stock price and manipulating the market value of WEMIX.

In October 2020, following WEMIX’s listing on a virtual asset exchange and a sharp rise in its price, Wemade reportedly liquidated approximately KRW 290 billion worth of WEMIX to fund business initiatives, including the acquisition of game companies.

However, the issue arose because Wemade failed to disclose this large-scale WEMIX sell-off in advance. As WEMIX’s price and Wemade’s stock price plummeted, Jang announced in early 2022 that WEMIX liquidation would be suspended. This led investors to anticipate restricted WEMIX circulation, prompting them to buy WEMIX, which in turn drove up both Wemade’s stock price and WEMIX’s market price.

Prosecutors, however, argued that the announcement was false. They alleged that even after the public announcement, Jang covertly liquidated approximately KRW 300 billion worth of WEMIX between February and October 2022 through means such as fund investments and collateral-backed loans.

Prosecutors further argued that the misleading disclosure misled investors and artificially inflated both Wemade’s stock price and the market value of WEMIX, thereby constituting a violation of the Financial Investment Services and Capital Markets Act. In August 2024, they indicted Jang and the company on charges of violating the Act, seeking a five-year prison sentence and a KRW 200 million fine for Jang, and a KRW 500 million fine for Wemade.

In response, Jang and his legal team consistently denied all allegations and mounted a strong defense from the beginning. A key argument was that virtual assets like WEMIX do not qualify as financial investment products under the Financial Investment Services and Capital Markets Act.

They also pointed out that, at the time, there were no legal obligations for disclosures or announcements related to cryptocurrencies. Notably, the Virtual Asset User Protection Act (Act on the Protection of Virtual Asset Users), which is currently in effect, was not yet enacted in 2022 and only came into force in July 2024. The defense centered on the argument that the legal framework of 2022 could not be retroactively applied.

After intense arguments from both sides, the court ruled in the first trial that WEMIX could not be clearly classified as a financial investment product under the current Financial Investment Services and Capital Markets Act. Additionally, given the lack of relevant legal frameworks at the time, the prosecution failed to sufficiently prove that the alleged false disclosures or circulation activities constituted market manipulation or illicit trading. As a result, both Jang and Wemade were acquitted.

With this ruling, Wemade has cleared its first major legal hurdle, and Jang has avoided criminal punishment. The outcome offers breathing room for Wemade’s blockchain gaming business built on the WEMIX ecosystem and is expected to accelerate efforts to restore market trust in WEMIX. In addition, Jang’s newly established company, NEXUS, is also expected to gain renewed momentum.

Speaking after the first trial, Jang reportedly acknowledged the hardship experienced by WEMIX investors, Wemade shareholders, and industry stakeholders, and offered a formal apology.

The ruling also impacted stock prices. Wemade’s stock surged by up to 4.98% during the trading session, Wemade Max by up to 18.64%, and Wemade Play by up to 12.66%. Additionally, NEXUS’s stock rose by as much as 22.42% during the session.

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