WEMIX Token Dispute Court Ruling

The Seoul Central District Court has ordered the now-closed virtual asset exchange GDAC to return 7.8 million WEMIX tokens, valued at approximately $7.31 million, to Wemade CEO Park Kwan-ho.

The court's decision supports Park's application for a temporary injunction filed on July 29. It mandates GDAC to comply within 30 days or face a daily fine of 3 million won after the deadline.

This ruling dismisses GDAC's allegations against Park of market manipulation and money laundering. Instead, it raises questions about their ability to maintain a 100% reserve ratio, contradicting the exchange's previous statements.

The court also hinted at potential issues stemming from a hacker attack in April 2022, which resulted in losses of about 20 billion won ($14.48 million). This incident may have compromised their ability to recover and maintain adequate reserves fully.

GDAC ceased operations on July 16, just days before implementing the 'Virtual Asset User Protection Act.' This closure prevented Park from withdrawing his remaining WEMIX tokens, currently valued at about 10.1 billion won.

The case has brought attention to crypto exchanges' practices during closures or delistings. Typically, exchanges allow complete withdrawals in such scenarios. GDAC's implementation of withdrawal limits raised suspicions about whether it held all of its customers' WEMIX tokens.

This ruling could have broader implications for the cryptocurrency industry in South Korea, particularly regarding exchange practices and regulatory compliance. It underscores the importance of maintaining proper reserve ratios and transparent operations in the rapidly evolving digital asset landscape.

Parallel Legal Proceedings Involving Terra Co-founder

The legal proceedings against Terra co-founder Daniel Shin are also unfolding in a related development. During the first hearing at the Seoul Southern District Court, Shin's lawyers requested more time to prepare for his criminal defense.

Shin, who didn't personally attend the hearing, has assembled a team of 30 lawyers for his defense, including former judges, prosecutors, and lawyers experienced in digital assets-related and capital markets law cases.

The court has granted this request, setting August 28 as the date for a second hearing. This decision has disappointed prosecutors, who are concerned about continuous delays.

The judge stated that they will review the lawyers' opinions and reconsider the trial preparation date to decide on the opportunity for defense and the order of interrogation.

These parallel legal proceedings highlight the cryptocurrency industry's growing scrutiny and regulatory actions. The outcomes of these cases could shape the future landscape of digital asset operations and investor protections in South Korea and beyond.