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Binance is reportedly nearing a deal with South Korean cloud service provider Megazone to sell most of its shares in the local cryptocurrency exchange Gopax.
The sale would significantly reduce Binance’s 72.6% stake in Gopax to as low as 10%, according to a report by The Chosun Ilbo on July 11.
An anonymous insider related to Gopax mentioned that the sale is driven by Binance’s need to improve its governance structure, a move prompted by local financial authorities. Binance initially acquired a majority stake in Gopax in February 2023, aiming to re-enter the South Korean market after withdrawing in 2021.
However, South Korean regulators blocked the acquisition, citing Binance’s regulatory issues in the U.S. and a lawsuit from the Securities and Exchange Commission (SEC).
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The planned sale comes just weeks before Gopax’s real-name account contract with Jeonbuk Bank is set for renewal in August. The two-year contract, which was signed in August 2022, is due to expire on August 11, 2024.
Gopax faced significant challenges in 2022 following the collapse of the FTX exchange. The failure of FTX forced Gopax to halt withdrawals of principal and interest payments in its decentralized finance service, which included products from the now-bankrupt Genesis Global Capital. Genesis’ parent company, Digital Currency Group, was reportedly Gopax’s second-largest shareholder and key business partner.
As of April 2024, Gopax’s total debt stood at 118.4 billion South Korean won ($86 million). Binance has not yet commented on the potential sale of its Gopax shares.