The company stated that concerns about possible security concerns were the reason for the delay. Meanwhile, Debiex was ordered to pay $2.5 million for running a romance scam and manipulating victims into transferring funds under false pretenses. In the meme coin sector, blockchain analysis exposed Hayden Davis’ alleged insider trading with the WOLF token, which is following a pattern similar to his previous fraudulent projects.
Wemix Hack Sparks Controversy
The Wemix Foundation recently addressed the concerns over the delayed disclosure of a major hack that resulted in over $6 million in losses. During a press conference, CEO Kim Seok-hwan firmly denied any attempt to cover up the incident, despite criticisms that the official announcement came four days after the attack.
On Feb. 28, hackers exploited the Play Bridge Vault, which is a crucial system for transferring WEMIX tokens between blockchain networks, and managed to withdraw 8.6 million tokens. The foundation only acknowledged the attack on March 4, which raised some serious questions among investors and the wider crypto community.
Emergency Meeting on Hacking Damage
Kim defended the decision by explaining that an immediate announcement could have exposed the platform to even more vulnerabilities. The team needed time to fully assess the breach and prevent additional exploits, while also trying to mitigate panic in the market.
The hacker reportedly got access by stealing the authentication key for the monitoring system of Nile, Wemix’s NFT platform. Over a span of two months, they meticulously prepared for the attack before executing a series of abnormal transactions. Out of 15 withdrawal attempts, 13 were successful, and the stolen tokens were quickly liquidated on exchanges outside of South Korea.
Upon discovering the breach, Wemix shut down its servers and launched an internal investigation. The company also filed a formal complaint with the Cyber Investigation Team of the Seoul National Police Agency, which has since started probing the incident. Kim acknowledged that delaying the announcement was his decision and took full responsibility for the consequences, including the impact on investors.
WEMIX price over the past month (Source: CoinMarketCap)
Despite efforts to avoid market panic, the price of WEMIX still suffered a sharp decline. The token fell by close to 40% from its pre-hack value, dropping from $0.70 on Feb. 27 to $0.52 on Feb. 28. By the time the hack was publicly disclosed on March 4, the price further slumped to $0.42. While it has since recovered slightly to $0.57, the asset is still far below its pre-hack level.
Crypto Scam Debiex Ordered to Pay $2.5 Million
While Wemix is dealing with the aftermath from its hack, crypto trading platform Debiex was ordered to pay approximately $2.5 million after failing to respond to a lawsuit by the US Commodity Futures Trading Commission (CFTC). The lawsuit accused it of operating a romance scam ring.
Arizona federal court Judge Douglas Rayes granted the CFTC’s motion for summary judgment on March 13, requiring Debiex to return around $2.26 million that it stole from customers and pay a civil penalty of nearly $221,500. The judge determined that Debiex’s failure to respond was not due to “excusable neglect.”
(Source: CourtListener)
The CFTC’s lawsuit was filed in January of 2024, and it alleged that Debiex engaged in a “pig butchering” scam, in which its operators built romantic relationships with victims over social media to gain trust and convince them to invest. At least five victims fell prey to the scheme, and collectively deposited approximately $2.3 million into Debiex accounts. Instead of engaging in legitimate trading, Debiex simply stole the funds.
The CFTC also targeted Zhāng Chéng Yáng, and accused him of acting as a “money mule” for Debiex by facilitating the movement of stolen funds through crypto wallets. On March 12, Judge Rayes granted a default judgment against Zhāng, ruling that the CFTC sufficiently alleged his involvement in handling illicit digital assets. One of Zhāng’s wallets on OKX held about 63 Ethereum worth around $119,500 and a small amount of Tether, and was ordered to be transferred to an unnamed victim. According to the court, OKX was voluntarily preserving the funds.
The complaint described how Debiex’s operators posed as female traders on social media, and engaged with victims with conversations and fabricated images to establish trust. Victims were eventually lured to Debiex’s website, which falsely advertised itself as a decentralized trading platform that offers futures trading and mining transactions. Once victims transferred their crypto, the platform manipulated their accounts with fabricated balance updates, false trading positions, and nonexistent profits. The CFTC stated that all of this information was likely fraudulent and that the victims’ funds were instead funneled through multiple digital wallets to obscure their final destination.
Luckily, regulators are increasingly taking action against fraudulent platforms that exploit trust and social engineering tactics to steal digital assets.
Blockchain Analysis Exposes Insider Trading
Also facing some trouble is Hayden Davis, the creator of the failed Libra (LIBRA) token. He launched another meme coin with concerning on-chain patterns that suggest serious insider trading activity.
The new Solana-based token is called Wolf (WOLF), and was released on March 8, capitalizing on speculation that Jordan Belfort, known as the Wolf of Wall Street, was launching his own coin. The token quickly reached a $42 million market cap before collapsing by over 99% in just two days.
Blockchain analytics platform Bubblemaps identified suspicious activity linked to the token’s launch, and pointed out that 82% of the supply was concentrated under a single entity. Further analysis revealed transfers across 17 addresses, all tracing back to an address controlled by Davis. Bubblemaps shared that this pattern closely resembled the activity that was seen with previous tokens launched by Davis, including HOOD and LIBRA.
Davis’ latest launch happened just weeks after the dramatic collapse of the Libra token, where eight insider wallets withdrew $107 million in liquidity, wiping out $4 billion in market value within hours. The Libra incident even became a political controversy after Argentine President Javier Milei’s endorsement of the coin led to impeachment risks. Argentine lawyer Gregorio Dalbon requested an Interpol Red Notice for Davis, arguing that his financial resources could make it possible for him to evade law enforcement.
The increasing prevalence of insider manipulation in the meme coin space is raising concerns about its impact on retail investors. Anastasija Plotnikova, the CEO of blockchain regulatory firm Fideum, warned that meme coins have shifted from community-driven projects to tools for value extraction.
Regulatory efforts to fight against meme coin-related fraud are gaining momentum in the United States. A New York lawmaker recently introduced a bill to establish criminal penalties for cryptocurrency fraud, specifically targeting deceptive practices associated with rug pulls and virtual token scams.
