Kim Nam-guk, Why Did He Invest in High-Risk WEMIX... Questions Remain

Wemix Experiences Unprecedented Volatility... Also Targeted by Day Traders
"Invested 900 Million in an Uncertain Place... Can't Understand It"

Controversy has erupted over Democratic Party lawmaker Kim Nam-guk's holding of tens of billions of won worth of the cryptocurrency WEMIX. Although he actively explained by disclosing transaction details, questions remain. Apart from the legality of Kim's investments, curiosity arises over why he made an 'all-in' investment in WEMIX, a cryptocurrency unfamiliar to the general public.

Kim Nam-guk, Member of the Democratic Party of Korea [Image source=Yonhap News]

WEMIX is a cryptocurrency first issued in 2020 by the domestic game company Wemade. WEMIX attracted attention due to its unprecedented surge. On January 1, 2021, WEMIX was priced at only 291 won, but by November 21 of the same year, it had risen to 29,409 won. It increased 100-fold in less than a year. Additionally, its volatile price swings drew attention. On November 23, 2021, WEMIX fluctuated by 42% in a single day, attracting investors aiming for short-term trades. Along with this, WEMIX's market capitalization exceeded 3.5 trillion won. During this period, it is known in the coin industry that many short-term speculative groups flocked to WEMIX.

However, WEMIX's price has since followed a downward trend. As of 4 p.m. on the 8th, the price was 1,250 won, meaning that if one had purchased WEMIX on November 21, 2021, and held it continuously, they would have incurred a 96% loss.

WEMIX's circulating supply has also been problematic. In October last year, WEMIX circulated more tokens in the market than planned but did not disclose this. The four major exchanges?Upbit, Bithumb, Coinone, and Korbit?delisted WEMIX citing inadequate disclosure. Currently, WEMIX has clarified this issue and has been re-listed exclusively on Coinone, where it is traded.

If Kim was not an aggressive investor seeking high returns in one go, it is hard to understand why he poured a large sum into a single highly speculative and unstable cryptocurrency like WEMIX. Kim explained regarding his 800,000 WEMIX tokens (worth about 6 billion won at the time), "I later switched to other cryptocurrencies, and the total valuation of the cryptocurrencies I currently hold is about 910 million won."

Former People Power Party spokesperson Shin In-kyu stated on his Facebook, "Investing 900 million won, not just 90 million won, in an uncertain and extremely risky cryptocurrency is irrational," adding, "There is sufficient suspicion that insider information or illicit methods were used in the transactions. Since this is an irrational and unusual situation, further investigation seems necessary." If a WEMIX investor had prior knowledge of the internal circumstances of the four major exchanges, Wemade's circulating supply issues, and the delisting decision, trading WEMIX would constitute insider trading. In the case of stocks, insider trading is a crime punishable by imprisonment of more than one year.

Kim initially explained that the source of funds for his cryptocurrency investment was 900 million won from the sale of LG Display stocks. He did not comment on whether he bought only WEMIX with that money or diversified into other cryptocurrencies. Kim issued a statement including special characters, saying, "Around mid-February 2022, I transferred cryptocurrency from □□ to △△, and as the cryptocurrency continued to plummet, I thought I should not hold more, so I transferred some from △△ to OO. Afterwards, I reinvested in other cryptocurrencies and currently hold several types in △△ and OO, with the current value of my cryptocurrency holdings around 910 million won."

In political circles, there are criticisms that this cryptocurrency controversy is not limited to Kim alone. Cryptocurrencies are not included in asset disclosures beyond blind trusts. It is impossible to know how much cryptocurrency all public officials, including lawmakers like Kim, have invested in. There are calls for a full investigation into how much cryptocurrency lawmakers hold and trade. People Power Party lawmaker Ha Tae-kyung said on the radio, "Those who do not disclose should be disciplined through bipartisan agreement," adding, "If all lawmakers do not disclose their cryptocurrency holdings, it could lead to political distrust."

This content was produced with the assistance of AI translation services.