After Z5, a Blockchain game developer acquired by Nexus, ended service on the 15th of last month, the price of its self-issued virtual asset MGOLD (MGT) token plunged, and it said it would compensate investors who suffered losses. But related procedures have not proceeded so far. Investors are said to have invested from tens of millions of won to hundreds of millions of won.
According to a compilation of ChosunBiz reporting on the 2nd, a person surnamed A invested 10 million won in the MGOLD token of the Blockchain-based massively multiplayer online role-playing game (MMORPG) "Pixel Heroes Adventure," which Z5 operated. The person said there were users who invested hundreds of millions of won in the MGOLD token.
Z5 is a game startup founded in Oct. 2020 by Chief Executive Kim Kang-su, a graduate of the Seoul National University Department of Electrical Engineering. Nexus acquired Z5 as a 100% subsidiary in Sep. last year.
Pixel Heroes Adventure is a P2E (Play to Earn) game in which the in-game currency MGOLD token can be traded like a real asset. Users can use the MGOLD token like cash on external exchanges or in wallets.
Z5 dismissed about 10 employees along with the service shutdown on the 15th of last month. It announced only that the reason for closure was "unavoidable circumstances." Right after the closure news, the MGOLD token price plunged from $0.0006 to $0.0003.
Nexus said it would later guide users through refund procedures, but the compensation method and timeline have not yet been disclosed. A Nexus official said, "Compensation for victims' losses is still being coordinated internally. We will announce it when it is decided."
Some employees of Nexus and Z5 sold MGOLD tokens before the service termination announcement. Nexus said it would investigate employees who realized gains, but the employee is said to have since left the company.
The industry says Chief Executive Jang Hyeon-guk of Nexus is repeating mistakes from his tenure as head of Wemade. Wi Jeong-hyeon, president of the Korea Game Society, said, "P2E using virtual assets is structured so that the virtual asset price rises only if the game is a hit, but Jang is excessively promoting the virtual assets over the game and creating a speculative arena."
In the past, Wemade's management sold large amounts of its self-issued coin WEMIX, worth hundreds of billions of won, without prior notice, sparking controversy. Jang promised at a press conference that there would be no additional sales of WEMIX, but it turned out that he continued liquidity efforts, such as selling WEMIX on exchanges.
Prosecutors viewed that, contrary to the announcement, Jang additionally cashed out WEMIX coins worth about 300 billion won from Feb. to Oct. 2022. Prosecutors indicted Jang on charges of falsely declaring he would stop cashing out WEMIX coins to reap benefits such as defending Wemade's stock price and the WEMIX price. However, the court ruled that virtual assets are not subject to the Financial Investment Services and Capital Markets Act and that manipulating WEMIX's circulating supply is not directly connected to an increase in Wemade's stock price, acquitting him, and the verdict was finalized.
WEMIX was delisted from domestic exchanges because its circulating supply did not match the disclosure, then relisted, but was delisted again after a delayed hacking notice. WEMIX became the first case to be delisted again after relisting.