Binance Initiates Stake Reduction in South Korean Exchange Gopax to Comply with Regulatory Norms
Luisa Crawford Jan 30, 2024 16:36
Binance plans to reduce its majority stake in South Korean crypto exchange Gopax to address regulatory compliance issues, following its acquisition in early 2023.
Binance, the world's largest crypto exchange, is planning to reduce its shareholding in Gopax, one of South Korea's largest crypto exchanges. This decision comes as a response to the regulatory challenges faced by Binance in South Korea, particularly from the Financial Services Commission (FSC) and the U.S. Securities and Exchange Commission (SEC). Binance's stake reduction is expected to occur within the next two months.
In February 2023, Binance acquired a majority stake in Gopax as part of its strategy to re-enter the South Korean market. However, this move led to complications with the FSC and the SEC, prompting the need for a stake reduction. The reduction plan involves converting a loan paid for GoFi repayment into equity and then selling part of the stake. This approach aims to resolve issues related to Gopax’s debt portion and regulatory compliance.
Binance's involvement in Gopax followed reports that Gopax’s parent company, Streami Inc., was among the top creditors of the insolvent crypto lender Genesis Global. Moreover, Digital Currency Group, the parent company of Genesis Global, was the second-largest shareholder in Gopax. Binance's decision to reduce its stake in Gopax is seen as a preemptive measure to address the lack of clear guidelines for new virtual asset reporting and to facilitate dialogue with financial authorities.
In addition to addressing regulatory issues, Binance's stake reduction in Gopax aligns with its broader strategy to expand its presence in Asia. Despite the reduction, Binance is expected to retain a significant stake in Gopax, maintaining its influence in the South Korean crypto market.
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