Key Takeaways
- South Korea’s FSC is scrutinizing Binance’s acquisition of local crypto trading platform Gopax following the SEC lawsuit.
- Binance acquired a majority stake in Gopax in February with the goal of reentering the South Korean crypto market after a two-year hiatus.
In a recent turn of events, Binance, one of the world’s largest cryptocurrency exchanges, faces potential business challenges in South Korea due to the ongoing lawsuit filed against it by the United States Securities and Exchange Commission (SEC). Reports indicate that the Financial Service Committee (FSC) of South Korea is scrutinizing Binance’s acquisition of local crypto trading platform Gopax following the SEC’s allegations.
Binance acquired a majority stake in Gopax back in February with the intention of reentering the South Korean crypto market after a two-year hiatus. However, the FSC has now suspended Gopax’s executive change report filed on March 7, citing the SEC lawsuit as the reason. The report included the nomination of three Binance members, including Leon Singh Poong, CEO of Binance Asia Pacific, as inside directors of Gopax.
The FSC stated that given the serious allegations of securities law violations made by the SEC and the subsequent requests from the SEC to freeze Binance.US assets, it is currently challenging to accept Binance’s acquisition request. An executive from the FSC mentioned the importance of considering the SEC’s lawsuit and cautiously indicated that the report is currently under internal review.
Binance’s acquisition of Gopax held significance not only for the crypto exchange’s reentry into the South Korean market but also for the revival of the troubled local trading platform. Gopax had faced significant challenges, including the suspension of withdrawals of principal and interest payments from its decentralized finance service, GoFi, following the collapse of the FTX crypto exchange and the bankruptcy of digital assets financial services firm Genesis in November 2022.
Binance’s investment in Gopax was made through the Industry Recovery Initiative, spearheaded by Binance itself. The initiative committed $1 billion in response to the fallout from the FTX collapse. The acquisition aimed to provide capital to the struggling Gopax exchange, enabling customer withdrawals and interest payments for GoFi.
However, with the FSC’s review process now affected by the SEC lawsuit, Binance’s plans to expand its presence in the South Korean market through Gopax’s acquisition face uncertainty. The outcome of the review will determine the future of Binance’s operations in South Korea and its efforts to revitalize Gopax.
SEC in its lawsuit against the exchange, has claimed that Binance CEO Changpeng “CZ” Zhao, BAM Trading,BAM Management, and Binance “have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”
