[P2E What Is It③] Kim Nam-guk's Coin Gate... P2E Facing Crisis

Independent lawmaker Kim Nam-guk, who left the Democratic Party of Korea amid controversy over virtual asset (cryptocurrency) trading, is leaving his office at the National Assembly on the 31st. Photo by Kim Hyun-min kimhyun81@

The domestic P2E industry is facing a crisis. As interest in cryptocurrency and the public's attention wane, it has encountered a massive setback known as the 'Kim Nam-guk Coin Gate.' The legalization of P2E games, a long-standing wish of the gaming industry, is also expected to become difficult for the time being.

The prosecution, investigating the so-called '6 billion won coin suspicion' case surrounding Assemblyman Kim Nam-guk, conducted a two-day search and seizure at Wemade's headquarters on the 24th and 26th of last month. Along with this, on the 31st, they also raided domestic cryptocurrency exchanges Upbit, Bithumb, and Coinone. Through this search and seizure, the prosecution is reported to have secured issuance and distribution records of Wemix, issued by Wemade.

Assemblyman Kim is suspected of starting cryptocurrency investments with 980 million won earned from stock sales and making profits estimated between 6 billion and 8.65 billion won through illicit trading.

There are allegations that lobbying was conducted targeting the National Assembly on behalf of game companies. Assemblyman Kim, who had promised to actively cooperate with the investigation, suddenly left the Democratic Party on the 14th of last month and went into hiding, only recently reappearing.

Leaving aside the prosecution's investigation, game companies are deeply worried that trust in the P2E game market, which they have been focusing on as a new source of revenue, may be severely damaged. Following the passage of the Culture and Arts Promotion Act last year, which recognized games as part of culture and arts, and the removal of the term 'addiction' from the Game Industry Promotion Act, the gaming industry has made various efforts to shed negative perceptions of games. For domestic game companies, the allowance of P2E games in Korea was a long-cherished goal.

Even before the Kim Nam-guk gate broke out, P2E games were unable to enter the institutional framework due to regulations from authorities such as the Game Rating and Administration Committee. The Game Rating and Administration Committee's regulations are based on current laws that prevent games from promoting gambling. Article 32, Paragraph 1, Clause 7 of the Game Industry Promotion Act states that tangible and intangible results obtained from games cannot be exchanged for cash because they may promote gambling. This law was established in response to the 2004 Bada Story incident. The Game Rating and Administration Committee considers in-game assets convertible to virtual assets similar to the 'score certificates' used as exchange means in Bada Story.

[Image source=Yonhap News]

As a result, P2E games released domestically have been refused rating classification or had their classification decisions canceled by the Game Rating and Administration Committee. Notable examples include Natriss's 'Infinite Breakthrough Samgukji Reverse' and Sky People’s 'Five Stars.' These game companies filed lawsuits to cancel the refusal of rating classification, but the courts sided with the Game Rating and Administration Committee, ruling that the P2E services of these companies sufficiently promote gambling.

What makes things even harder for P2E game companies is the decline in the value of coins. The price of cryptocurrency is the key to the success of P2E games. When prices fall, the value of items also drops, which can lead to the collapse of the in-game economic system.

With user attrition, the coin-related scandal triggered by Assemblyman Kim, and government regulations, game companies that had marked P2E as a future growth engine are going through tougher times than ever. An industry insider said, "It is regrettable that the political sphere seems to view blockchain and P2E games merely as tools for speculation and lobbying," adding, "I hope the problems of a specific politician are not overgeneralized as issues of the entire P2E gaming industry."

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