Binance is finalizing the sale of its majority stake in crypto exchange Gopax to South Korean cloud service provider Megazone, local media publication The Chosun reported. This decision is pivotal for Gopax, one of Korea's top five won exchanges, as it faces the risk of delisting if governance issues remain unresolved.

Enhancing Governance

Currently, Binance holds a 72.6% stake in Streami, the operator of Gopax. However, the exchange plans to reduce its stake to around 10% by selling shares to Megazone. This move is reportedly part of the exchange's initiative to enhance its governance structure, a requirement set by financial authorities to process a change report ahead of renewing Gopax's real-name account contract with Jeonbuk Bank.

A virtual asset industry insider told the media publication that the sale aims to meet the demands of financial authorities, who have delayed approving Binance's change report for over a year. The Financial Services Commission has reportedly insisted that Binance reduce its stake to less than 10% to proceed with the report. Binance responded in March, committing to restructure its governance and lower its Gopax stake.

Previously, BF Labs, a domestic KOSDAQ-listed company, emerged as a potential partner for Binance. BF Labs acquired an 8.55% stake in Streami and sought to increase its holdings. However, funding issues halted further acquisitions, leaving Binance to seek other solutions to comply with regulatory requirements.

The urgency of this stake sale is underscored by the looming deadline for Gopax's real-name account renewal with Jeonbuk Bank on August 11. The revised Special Financial Transactions Act mandates that exchanges report changes related to real-name account renewals at least one month prior to signing the contract. Thus, a decision on the renewal must be reached by the end of this month.

GOPAX Faces Financial Distress

GOPAX is currently experiencing severe financial distress, with total debt reaching 118.4 billion won as of April this year. The debt situation worsened due to the rise in Bitcoin prices and the fallout from the FTX bankruptcy in 2022, which left Gopax with significant liabilities. Although Binance agreed to cover Gopax's 56 billion won debt during the acquisition, this agreement hinged on financial authorities allowing Binance's entry.

A Megazone representative mentioned that they are exploring various forms of collaboration, including equity acquisition, but emphasized that no concrete decisions have been made regarding the process or timing.

This sale represents a critical time for Binance and Gopax. Successfully navigating this transaction and securing the approval of financial authorities is essential to maintaining their status as a key player in Korea's won exchange market.