Points
- Binance is preparing to reduce its 72.6% stake in the Gopax exchange to as low as 10%.
- The sale aims to improve Gopax’s governance structure, as requested by South Korean financial authorities.
- The deal is expected to be finalized soon, with South Korean cloud service provider Megazone as the buyer.
- Regulatory issues and financial challenges have influenced Binance’s decision to sell.
Binance, the world-renowned cryptocurrency exchange, is reportedly in the final stages of negotiations to sell a majority stake in the South Korean exchange Gopax. According to local sources, Binance is preparing to reduce its 72.6% stake in Gopax to as low as 10%, with the South Korean cloud service provider Megazone expected to acquire the majority stake.
Strategic Sale to Improve Governance
The decision to sell a majority stake in Gopax is driven by requests from South Korean financial authorities to improve the exchange’s governance structure. The sale aims to address these regulatory concerns and ensure that Gopax operates within the required legal framework. An unnamed industry insider related to Gopax mentioned that the deal is close to being finalized and could be completed within the month.
Background of the Acquisition and Challenges
Binance initially acquired a 72.6% stake in Gopax in February 2023 as part of its efforts to re-enter the South Korean market after ceasing operations there in 2021. However, the acquisition faced regulatory hurdles, with South Korean regulators denying approval for the change in majority ownership. This blockage effectively halted Binance’s capital injection into Gopax, leaving the exchange in a precarious financial position.
Gopax was among the firms impacted by the collapse of the FTX crypto exchange in November 2022. Following the FTX collapse, Gopax was forced to halt withdrawals of principal and interest payments in its decentralized finance service, which featured products from the now-bankrupt crypto lending firm Genesis Global Capital. As of April 2024, Gopax reportedly had total liabilities of 118.4 billion won （$86 million）.
Financial and Regulatory Implications
The sale of Gopax shares to Megazone is seen as a strategic move to comply with regulatory requirements and improve the exchange’s financial stability. Securing the real-name account renewal with Jeonbuk Bank, a critical component for maintaining its status as a won-based cryptocurrency exchange in South Korea, is also a priority.
Conclusion
Binance’s decision to finalize the sale of a majority stake in Gopax to Megazone marks a significant step in addressing regulatory and financial challenges. By reducing its stake and improving governance, Gopax is better positioned to secure necessary approvals and stabilize its operations. This strategic move reflects Binance’s commitment to complying with local regulations while continuing to support the growth of the cryptocurrency market in South Korea.
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