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Binance, a leading cryptocurrency exchange, is reportedly in the final stages of negotiating the sale of a majority stake in the South Korean exchange Gopax to the local cloud service provider Megazone.
According to a report by South Korea’s news agency The Chosun Ilbo on July 11, Binance is preparing to reduce its 72.6% stake in Gopax to as low as 10%.
An anonymous industry insider related to Gopax indicated that Binance is pushing the sale to enhance its governance structure as requested by local financial authorities.
Initially, Binance announced the acquisition of a 72.26% stake in Gopax in February 2023, aiming to re-enter the South Korean market after ceasing operations there in 2021.
However, the acquisition faced hurdles as South Korean financial authorities blocked the capital injection by denying the change of the largest shareholder.
Additionally, Binance’s regulatory challenges in the United States, including a lawsuit from the US Securities and Exchange Commission, fueled further regulatory skepticism in South Korea.
The recent news about the potential sale comes just weeks before Gopax is expected to renew its real-name account contract with Jeonbuk Bank, which is due to expire on August 11, 2024.
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Jeonbuk Bank and Gopax had signed a two-year real-name account contract in August 2022.
Cointelegraph reached out to Binance for a comment on the sale of Gopax shares but did not receive a response at the time of publication.
Gopax was significantly impacted by the collapse of Sam Bankman-Fried’s FTX crypto exchange in November 2022.
Shortly after FTX’s collapse, Gopax halted withdrawals of principal and interest payments in its decentralized finance service, which included products from the now-bankrupt crypto lending firm Genesis Global Capital.
Before its bankruptcy, Genesis’ parent company, Digital Currency Group, was reportedly Gopax’s second-largest shareholder and a crucial business partner, supplying its GoFi product.
According to The Chosun Ilbo, Gopax’s total debt was 118.4 billion South Korean won ($86 million) as of April 2024.
Binance’s decision to sell the majority stake in Gopax underscores the complex regulatory landscape and the challenges of maintaining operations in the highly scrutinized cryptocurrency market.
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