Seoul: Wemade, a Kosdaq-listed gaming company in South Korea, has encountered significant criticism following a major cryptocurrency theft at its Singapore-based subsidiary, Wemix Foundation. The incident, which involved a substantial loss of digital assets, has raised concerns over the company's delay in public disclosure and its potential impact on the crypto market.
According to Yonhap News Agency, Kim Seok-hwan, CEO of Wemix Foundation, addressed the hacking incident at a press conference, expressing his apologies and committing to uncovering the details of the theft. The breach, identified on February 28, resulted from a malicious external attack on the foundation's "play bridge vault" cryptocurrency wallet, leading to the loss of 8,654,860 Wemix coins, valued at approximately 8.75 billion won ($6 million).
The delayed announcement of the theft until March 4 has put Wemix Foundation at risk of being delisted from Korea's crypto exchanges. The Digital Asset Exchange Joint Consultative Body (DAXA) has already suspended deposits of Wemix coins, citing them as items of concern. CEO Kim clarified that the disclosure delay was intended to prevent further attacks and avoid panic in the crypto market.
This incident is not an isolated one for Wemix. In October 2022, the crypto platform faced issues related to disclosure, leading to its delisting in December 2022 before being relisted in February 2023. In response to the current crisis, Wemix Foundation has announced a buyback plan to mitigate the fallout and restore market confidence.
The situation underscores broader security and investor protection issues within the domestic crypto market, which is particularly significant given South Korea's position as the world's second-largest trader of bitcoin. The country's five crypto exchanges reported a combined daily trade value of $12.1 billion in November last year, surpassing the totals of both the main bourse Kospi and the tech-heavy Kosdaq.
Security concerns in the crypto market are exacerbated by threats such as the North Korean state-sponsored Lazarus hacking group. While Lazarus has been involved in previous large-scale heists, Wemix CEO Kim stated that the group is not believed to be responsible for the recent theft, based on consultations with third-party security experts.
The incident highlights the urgent need for enhanced security measures as South Korea's financial regulators, including the Financial Services Commission (FSC), take steps to allow corporate investment in the cryptocurrency market. The FSC has announced plans to develop guidelines to combat money laundering and strengthen internal controls by the third quarter of this year.
The cryptocurrency theft at Wemix demonstrates the substantial risks involved, emphasizing the necessity for regulators and crypto exchanges to bolster security systems to protect digital assets from external threats like cyberattacks.