Gopax, a leading cryptocurrency exchange in South Korea and majority-owned by Binance, reportedly sold its users’ deposit claims at half their original value in August 2023.
According to a report by local news agency Hankyung on May 27, Gopax owes its users a total of 70 billion South Korean won ($51.4 million) due to its exposure to the failed institutional crypto lending firm, Genesis Global, which collapsed in November 2022. The exchange has reportedly paid out 50% of this amount to its users.
However, the remaining unpaid digital assets, which were worth 35 billion won at the lowest point of the crypto market in November 2022, have allegedly increased to a total of 100 billion won, with the price of Bitcoin at $69,000 per coin. In March, the Korean Times reported that Gopax is currently facing significant financial difficulties due to its growing debt liabilities.
Genesis, the operator of Gopax’s crypto custody service GoFi, had to halt withdrawals due to its exposure of $1.2 billion to the ill-fated Singaporean hedge fund, Three Arrows Capital. A source interviewed by the Korean Economic Daily commented on the situation.
In February 2023, Binance acquired a significant stake in Gopax, although the terms of the deal were not disclosed. This move was seen as a way for Binance to re-enter the South Korean market through Gopax.
However, the acquisition was put on hold on June 7, 2023, when the United States Securities and Exchange Commission filed a lawsuit against Binance. This prompted a review of the deal by South Korea’s Financial Service Committee.
Earlier this month, Genesis obtained approval from U.S. bankruptcy courts to return $3 billion in cash and cryptocurrency to its creditors. The presiding judge, Sean Lane, overruled an objection raised by Digital Currency Group (DCG), the parent company of Genesis. DCG argued that its bankrupt subsidiary should only pay its customers and creditors the value of the crypto assets they held. As a result, DCG will not recover any funds from Genesis’ bankruptcy proceedings.
In related news, Binance.US recently won an appeal to reinstate its money services license in Florida.