Binance, the world’s largest cryptocurrency exchange by trading volume, is set to decrease its stake in the South Korean crypto exchange GOPAX.
This move comes as part of Binance’s efforts to stay compliant with digital-asset reporting requirements and address regulatory concerns in South Korea. Details of Binance’s stake reduction in GOPAX are expected to be disclosed within the next couple of months.
In February 2023, Binance purchased the equity stake from Gopax’s largest shareholder, Lee Jun-hang, marking its re-entry into the South Korean market after a two-year absence. Pending the official approval of Korean authorities, Binance was reportedly in the final steps to complete the transaction, which would allow it to operate once again in the local crypto market.
However, following a debt-equity swap, Binance’s stake in GOPAX may have risen to around 80%. According to Steve Young Kim, Binance’s Asia-Pacific director, the company is now in the early stages of discussions to sell off a portion of its stake, as reported by News1.
Binance had submitted the so-called ‘executive change report’ as part of the due diligence requirements to buy a controlling share in Gopax. The report sought the appointment of three Binance executives as inside directors as part of ownership transfer.
GOPAX, one of the five fully registered crypto exchanges in South Korea, faced liquidity challenges following the FTX collapse. The Seoul-based platform suspended payments in its DeFi service GOFi, which was introduced in partnership with crypto lender Genesis Global Capital. But Binance’s intervention in February 2023, which involved acquiring a 72.26% stake in GOPAX, helped resolve these liquidity problems.
Steve Kim explained that Binance’s strategy involves converting its loans to GOPAX into equity and then selling these shares to other firms. This approach is said to alleviate GOPAX’s debt issues and enable Binance to transition from the largest to the second-largest shareholder.
In December, GOPAX revealed progress in securing funds to normalize its operations and restore lost deposits. The revised plan was expected to help GOPAX renew its registration with the Financial Services Commission (FSC) in South Korea. However, the FSC has delayed approving GOPAX’s registration change for over a year due to concerns related to Binance’s legal challenges in the US.
South Korean authorities apply strict new rules to crypto businesses to minimize the risks of money laundering and market manipulation, which went into full effect last year.
