Following the recent launch of a $100 million Web3 fund alongside Singapore’s Whampoa Group, South Korean gaming company Wemade has revealed an unrelated financial setback. The firm acknowledges owing 53.7 billion won ($41 million) in unpaid taxes to South Korea’s tax authorities, constituting approximately 10% of its equity. The disclosure, made through a filing with KOSDAQ on Jan. 3, attributes the tax liability to WEMIX tokens issued by Wemade Tree, a Wemade subsidiary, from January 2019 to 2022. The company clarifies that the tax debt is slated for settlement by Feb. 29, 2024, adhering to legal procedures.
Reports indicate that tax authorities imposed a penalty of up to 50 billion won ($38 million) on Wemade. The WEMIX tokens, initiated in 2020, have demonstrated significant growth, delivering a 635% return since their inception. Currently trading at $2.64, the tokens boast a diluted market cap of $2.5 billion. Functioning as an Ethereum Virtual Machine-compatible protocol, WEMIX powers Wemade’s network of Web3 applications.
Despite South Korea’s previous ban on initial coin offerings in 2017, the country is now contemplating reversing the prohibition and instead imposing a 20% tax on profits arising from crypto transactions. In a strategic move on Dec. 22, 2023, Wemade partnered with Whampoa Group to establish a $100 million Web3 fund, aiming to invest in digital asset initiatives in the Middle East. The collaboration positions Whampoa Digital as an ecosystem partner for Wemade’s Wemix Play Center in Dubai International Financial Centre (DIFC) Innovation Hub, with the fund capital supporting developers within Wemix Play.
The taxation setback adds a layer of complexity to Wemade’s financial landscape, as the company simultaneously forays into Web3 investments and collaborations, emphasizing the challenges and regulatory considerations in the evolving crypto and blockchain space.
Photo by Karolina Grabowska
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