Wadiz, a leading South Korean crowdfunding platform, has announced plans to enhance its monitoring system with a new compliance reporting feature.
The move aims to identify and address violent activities within the funding community to protect investors and maintain trust in the platform.
The platform has categorized violent activities into four main groups: intellectual property rights violations, fake or fraudulent content, the sale of funded products on other commerce channels, and community policy violations.
Users can report any of these activities before a project is launched, and Wadiz will provide reference cases, formats, and detailed processes for users to follow when reporting violations.
This decision to increase oversight is rooted in Wadiz's business model. Reward-based crowdfunding inherently carries potential risks.
Because it is classified as a "donated gift" by the Korean Consumer Affairs Bureau, it is not subject to the Electronic Commerce Consumer Protection Act. Maintaining trust between investors and creators is essential to the success of crowdfunding initiatives.
Recently, some creators have taken advantage of this trust, with popular MCN creators on YouTube highlighting fraudulent activity on Wadiz projects. In addition, a drop in searches on Google Trends since last November also points to a potential problem, with one of the related searches being "wadiz fraud."
Wadiz founder Shin said the new feature is an attempt to leverage the philosophy of crowdfunding to protect the platform's community and foster a healthier ecosystem.
The company estimates a total crowdfunding volume of KRW 400 billion (US$340 million) this year and is targeting an IPO in 2021.
However, despite these achievements, the platform faces challenges from fast-moving competitors and fraudulent creators.