Binance to Sell Majority of Gopax Shares to Address Governance Concerns

by

As a researcher with extensive experience in the cryptocurrency industry and a deep understanding of the regulatory landscape in South Korea, I believe that Binance’s decision to reduce its stake in Gopax is a strategic move aimed at addressing regulatory concerns and ensuring compliance with local laws.

According to reports, Binance, the global cryptocurrency exchange, is in discussions with Megazone, a South Korean cloud service provider, to significantly reduce its stake in the local exchange Gopax. Currently holding a 72.6% share, Binance aims to lower this ownership to as low as 10%, with the intention of addressing regulatory concerns regarding governance raised by South Korean financial authorities.

Final talks are underway between Binance and Megazone, a leading South Korean cloud service provider, to decrease Binance’s ownership in Gopax, a South Korean cryptocurrency exchange Binance acquired, from approximately 72.6% to around 10%. Last year, Binance obtained the majority share of Gopax through an investment, but this transaction faced obstacles due to regulatory issues.

— Wu Blockchain (@WuBlockchain) July 11, 2024

Strategic Adjustment for Regulatory Compliance

The persistent legal issues faced by Gopax led to the disposal of most of its shares acquired in February 2023. This move was aimed at restoring Gopax’s presence in the South Korean market following a withdrawal from the country in 2021.

South Korea’s regulatory bodies prevented Binance from investing in Gopax due to concerns over the shift in the primary shareholder.

South Korean authorities are currently under increased scrutiny due to various American developments, such as lawsuits from the Securities and Exchange Commission (SEC) and regulatory issues. In response to these regulations, Binance has altered Gopax’s ownership structure as a means of complying with local requirements.

Upcoming Contract Renewal Influences Decision

The sale will occur around the same time that Gopax’s real-name account agreement with Jeonbuk Bank is due to renew on August 11, 2024. This contract, which was first established in August 2022, plays a significant role in enabling Gopax to carry out its business activities under South Korea’s rigorous regulatory environment.

The upcoming renewal has increased the need for Binance to make necessary adjustments in its relationship with Gopax, ensuring both regulatory compliance and uninterrupted operations.

Since the demise of FTX in November 2022, Gopax has encountered difficulties, resulting in paused withdrawals for its decentralized finance offerings provided by Genesis Global Capital. The financial woes deepened when Genesis itself filed for bankruptcy, leaving Gopax with a reported debt of approximately 118.4 billion South Korean won ($86 million) as of April 2024.

As a analyst, I would put it this way: In order to enhance governance and comply with local regulations, Binance intends to engage in discussions with Megazone. This collaboration is crucial for ensuring the uninterrupted presence of Gopax in the South Korean market.

Read More

2024-07-11 19:48