Wemade chief faces censure amid stock fall

The Korea Times

The Korea Times

Finance

Mon, September 25, 2023 | 04:34

Cryptocurrency

Wemade chief faces censure amid stock fall

Posted : 2022-11-28 15:10

Updated : 2022-11-29 13:14

Wemade CEO Chang Hyun-guk / Yonhap

By Lee Min-hyung

Wemade CEO Chang Hyun-guk came under mounting criticism from investors after the game publisher's stock plummeted in the aftermath of a shocking delisting of its Wemix coin from Korea's four major crypto exchanges.

According to data from the Korea Exchange, Wemade shares went on a losing streak on Monday after its price closed with a drop of 29.89 percent on the previous trading day. The steep stock fall was attributed to the abrupt decision by the Digital Asset eXchange Association (DAXA) to stop supporting any trading of the controversial cryptocurrency. Other Kosdaq-listed Wemade affiliates ― such as Wemade Mix and Wemade Play ― also fell by around 30 percent on Friday.

Investors' fury is showing no signs of abating, as Wemade shares continued to extend losses of more than 10 percent on the first trading day this week.

In October, Wemix was designated as a cryptocurrency that required cautious investment from DAXA ― an alliance of the nation's top five crypto exchanges. But Chang had since dismissed the possibility of the coin's delisting, saying that the company was in talks with the crypto exchange alliance over suspicions that the amount of Wemix in circulation was larger than what the firm notified earlier.

Chang cried foul over the unilateral decision by the exchanges, pledging to bring the case to court and take all possible legal measures.

But the crypto exchange coalition also issued a statement over the latest decision.

"We have left open all the possibilities and gave a chance for Wemix to prove itself over the suspicion, but the company failed to do so and could not recover its tarnished trust," an official from DAXA said Monday. "That's why the affiliated members of the alliance made the unilateral decision to protect the market and investors."

Even if it remains to be seen whether or not the decision by DAXA was fair, the delisting of Wemix has dealt a severe blow to Wemade's corporate image and its stock value, according to market analysts.

"Uncertainties surrounding Wemade's platform have escalated due to the Wemix delisting," Lim Hee-seok, an analyst at Mirae Asset Securities, said. "Sales from Wemade's platform business accounts for less than 1 percent of its total sales, so the company will not be hugely affected by the latest scandal from a short-term viewpoint. But with its crypto uncertainty rising, the firm's blockchain games linked with the Wemix coin will suffer from falling traffic and sales."

The analyst advised investors to remain careful before investing in the company.

"Wemade shares are feared to experience extreme volatility, so investors should remain vigilant," the analyst said. "The shares will continue to be bearish until the Wemix coin's trading is resumed or its new games generate tangible global outcomes."

mhlee@koreatimes.co.kr