Cryptocurrency giant Binance is nearing a deal to reduce its ownership in the South Korean exchange Gopax. The move comes as Binance aims to allay local regulators and secure crucial banking partnerships.
According to a South Korean news agency, Binance is currently in advanced talks with cloud provider Megazone to sell off a significant portion of its 72.6% stake in Gopax. If finalized, this deal could result in Binance’s ownership dropping to approximately 10%, marking a noteworthy change for the exchange it purchased just last year.
Industry insiders say the stake sale is driven by pressure from South Korean financial authorities. Regulators have reportedly demanded that Binance reduce its control over Gopax to below 10% before approving changes to the exchange’s ownership structure.
Binance acquisition and debt settlement issues
The ongoing regulatory review has placed Binance in a state of uncertainty for more than a year, delaying its complete integration of Gopax into its operations. As a result, Gopax is now grappling with a financial crisis amidst the broader turbulence in the market.
When Binance acquired a majority stake in February 2023, it undertook to settle Gopax’s $46 million debt resulting from the FTX collapse. However, this financial rescue hinged on obtaining regulatory approval, a step that never came to realization. Meanwhile, the soaring price of Bitcoin has inflated Gopax’s debt to almost $97 million.
The mounting financial pressure comes at a critical juncture for Gopax. The exchange must renew its all-important real-name account contract with Jeonbuk Bank by Aug. 11 or risk losing its ability to serve Korean-won traders. Failure to secure this renewal could be not good for Gopax’s position in the competitive Korean crypto market.
Binance is currently in a race to reorganize ownership of Gopax and secure regulatory approval before the August deadline. The potential agreement with Megazone is viewed as a final attempt to maintain Gopax’s position as a key won-to-crypto gateway.
