Lack of transparency in token count allegedly clerical error
The metaverse project WeMade has been placed on the “Caution list” in South Korea due to inaccurate token data.
A “Caution list” is a list of tokens or projects that have been found to have inaccurate information. WeMade’s inclusion on this list means that there is a possibility that the project needs to be more transparent with its token data, which could lead to investors being misled.
This is not the first time that WeMade has come under fire for its handling of token data. In December, the project was accused of manipulating its token price by “burning” tokens, which led to a sharp increase in value. WeMade denied these allegations, but the incident led to many investors losing faith in the project.
The latest news of WeMade’s inaccuracies is likely to damage the project’s reputation further and could lead to more investors losing money. Investors should be cautious before investing in any project on the Caution list.
WeMade is a gaming and metaverse project with a company based in South Korea. The project was recently placed on an “investment caution” list by the country’s crypto exchanges after misrepresenting figures about its token supply. WeMade claims that it accidentally left some tokens out of the calculation.
In a notice to traders, crypto exchange UpBit claimed that WeMade had 72 million more wemix tokens circulating than it reported. UpBit was followed by rival exchanges Bithumb, Korbit, and Coinone in placing an investment warning on the tokens and the project. In the notice Upbit made the following remark:
“It was confirmed that there was a difference between the distribution volume plan information submitted to DAXA member companies such as Upbit and the actual distribution volume”
DAXA, the Digital Asset Exchange Joint Association, is the country’s self-regulating organization that oversees the legal aspects of crypto offerings.
WeMade has responded to these allegations, saying that the inaccuracies are due to an “internal error” and that they are working to correct the problem.
WeMade said in a Sunday post that it accidentally left out additional tokens issued to partners and funds that were meant to increase participation in the WeMade ecosystem. This did very little to persuade the Upbit team to think otherwise. In the post, WeMade addressed the differences
“We acknowledge that 1) there may be some time differences between WEMIX Quarterly report posting and real-time circulating supply, and 2) there was some insufficient update of the circulating supply of CoinMarketCap and communication with the exchanges,”
“As more and more partners believe and participate in the future of WEMIX and the development of the ecosystem, a certain amount of WEMIX was inevitably supplied at each partnership/contract signing depending on the purpose or form of the cooperative model,”
Upbit made it clear that the tokens would remain under review and if any other harmful or fraudulent activity were discovered it would end all transactions in wemix.
UpBit is a South Korean cryptocurrency exchange launched in October 2017 and operated by Kakao Corp subsidiary Dunamu. The platform uses the Upbit Security System, which is an integrated system that includes Kakao’s know-your-customer (KYC), anti-money laundering (AML), and transaction monitoring systems.
As of January 2018, UpBit was the largest cryptocurrency exchange in South Korea with a market share of 52.8%. The exchange had a 24-hour trading volume of $4.35 billion at that time.
In May 2018, Upbit was investigated by prosecutors for alleged fraud and embezzlement. The exchange was accused of using customer funds to cover up a shortfall of $50 million. However, the exchange was cleared of any wrongdoing in November 2018 and resumed operations.
In June 2019, Upbit was hacked and lost 342,000 ETH (worth approximately $58 million at the time) from its hot wallet. The hack caused the exchange to stop all withdrawals and deposits for a month while it moved all assets to cold storage.
Upbit has since resumed operations and is once again one of the largest cryptocurrency exchanges in South Korea. As of January 2021, Upbit is the fourth largest cryptocurrency exchange in the world with a 24-hour trading volume of $6.4 billion.