Korean Gaming Firm Wemade Faces $41M Tax Debacle Following $100M Web3 Fund Launch

South Korean gaming company Wemade finds itself in a tax predicament, owing $41 million to the country's tax authorities after recently unveiling a $100 million Web3 fund in collaboration with Singapore's Whampoa Group.

Unpaid Taxes Linked to WEMIX Tokens

WEMIX Token Tax Woes

Wemade discloses a tax liability of 53.7 billion won ($41 million) related to WEMIX tokens issued by its subsidiary, Wemade Tree, spanning from January 2019 to 2022. This unpaid amount accounts for approximately 10% of the company's equity.

Tax Deadline Approaches

Legal Procedures for Tax Repayment

As per a filing with KOSDAQ on Jan. 3, Wemade clarifies that the tax debt is slated to be settled by Feb. 29, 2024, adhering to legal procedures. Reports suggest that authorities may impose a penalty reaching up to 50 billion won ($38 million).

WEMIX Tokens' Success Amidst Turmoil

WEMIX Tokens: A Success Story

Introduced in 2020, WEMIX tokens have surged by an impressive 635%, presently trading at $2.64 with a diluted market cap of $2.5 billion. This Ethereum Virtual Machine compatible protocol powers Wemade's Web3 applications network.

Regulatory Landscape in South Korea

Cryptocurrency Regulations in South Korea

South Korea, having banned initial coin offerings in 2017, is contemplating lifting the ban. Instead, authorities are considering a 20% tax on profits arising from cryptocurrency transactions.

Web3 Fund Launch Amidst Crisis

Web3 Fund and Whampoa Collaboration

Despite the tax setback, on Dec. 22, 2023, Wemade partnered with Whampoa Group to launch a $100 million Web3 fund aimed at investing in digital asset initiatives in the Middle East. Whampoa Digital will be an ecosystem partner supporting Wemade's Wemix Play Center in Dubai International Financial Centre (DIFC) Innovation Hub.

Wemade's tax troubles cast a shadow on the otherwise promising Web3 venture, underscoring the challenges faced by companies navigating the evolving regulatory landscape in the cryptocurrency domain.