Seoul Central District Court has ruled in favor of Wemade’s CEO, Park Kwan-ho, in a high-profile legal dispute involving WEMIX tokens. The court has mandated that GDAC, a now-defunct virtual asset exchange, return approximately $7.31 million worth of WEMIX tokens to Park. This ruling highlights critical issues within the cryptocurrency sector, particularly regarding exchange operations, regulatory adherence, and investor protection.
The court’s order requires GDAC to return 7.8 million WEMIX tokens within 30 days. Failure to comply will result in a daily fine of 3 million won. This decision comes after Park’s request for a temporary injunction was supported by the court. The ruling dismisses GDAC’s allegations of market manipulation and money laundering against Park. Instead, it raises concerns about the exchange’s reserve ratios and operational transparency.
GDAC’s closure on July 16, which coincided with the upcoming implementation of South Korea’s ‘Virtual Asset User Protection Act,’ has further complicated the situation. The exchange’s shutdown prevented Park from withdrawing his remaining tokens, which are currently valued at about 10.1 billion won. This development has sparked debate over typical exchange practices during delistings. Usually, exchanges permit full withdrawals, but GDAC imposed withdrawal limits, raising questions about its reserve integrity.
Moreover, the court’s decision brings attention to a hacker attack GDAC suffered in April 2023. This incident, which led to losses of approximately 20 billion won ($14.48 million), might have impacted the exchange’s ability to maintain adequate reserves. The potential link between this attack and GDAC’s operational issues underscores the importance of transparent and secure practices in the digital asset industry.
South Korea’s Inaugural Crypto Law Now in Effect: Key Regulations and RequirementsThis ruling could set a precedent for cryptocurrency exchanges in South Korea. It emphasizes the need for exchanges to uphold proper reserve ratios and to be transparent about their operations. This decision could influence future regulatory frameworks and operational standards within the cryptocurrency sector.
