Crisis Looms Over South Korea's Play-to-Earn Industry
The Play-to-Earn (P2E) market in South Korea has descended into turmoil due to cryptocurrency dealings by a local parliament member. This scandal has cast a spotlight on the likely illicit and uncomfortably close relations between gaming firms and politically influential lobbyists.
In the previous year, Kim Nam-kuk, a lawmaker from the opposition Democratic Party, possessed Wemix cryptocurrency worth approximately 6 billion won ($4.5 million) issued by local game developer Wemade. The representative moved a significant portion of these assets to a different wallet, after which the tokens were sold off. In addition, Kim invested in other game-related cryptocurrencies, including Netmarble's MarbleX.
The tale of the legislator-turned-crypto-trader didn't sit well with South Korea's Financial Intelligence Unit, operating under the Financial Services Commission. The ruling People's Power Party and several financiers struggled to comprehend how the people's elected official came to possess such a large number of tokens. Suspicions were also raised about Nam-kuk potentially using insider information to determine optimal times for buying and selling cryptocurrency.
Kim Nam-kuk: Lawmaker and Crypto-Trader Source: hankyung.com
The Korea Game Society subsequently stepped into the fray. Its members called for an investigation into whether Wemade and other game-development companies were implicated in bribery to give legal status to P2E games.
There were lots of rumors that P2E game operators and associations lobbied the National Assembly. An inspection was needed to see whether lawmakers from both the ruling and opposition parties and their staffs invested in Wemixsaid Wi Jong-hyun, head of Korea Game Society and a professor teaching business at Chung-Ang University.
Indeed, there is a long-standing prejudice against monetized video games in South Korea. Nearly 20 years ago, the country experienced a widespread fascination with the video game "Sea Story." The game developer promised to reward players with certificates that could be cashed in. However, the project turned out to be a fraud, causing people to lose money, and tragically, some even committed suicide as a result.
Just last fall, societal attitudes towards P2E (Play-to-Earn) began to shift in a more positive direction. In September, the local Ministry of Sports, Culture, and Tourism initiated research into the social impact of P2E games. However, the controversy surrounding the legislator-turned-crypto-trader has once again swayed public sentiment against such forms of entertainment.
Representatives of the ruling party have since visited Wemade's headquarters. They were seeking answers from CEO Chang Hyun-guk about the allegations leveled against the company. Chang professed that he was not acquainted with Nam-kuk and was unaware of his supposed manipulations with the company's tokens.
Since P2E games are related to virtual assets, it is affected by a lot of external issues. Games should be seen as games, but there are difficulties in that when it comes to P2E gamesthe company expressed regretfully
Participants in the crypto market fear that due to the issues surrounding Kim Nam-kuk, the creation of a legislative environment favorable to the development of "play to earn" games may once again be significantly delayed. The budding P2E business in South Korea may face complete destruction.
