Due to the delayed inflow of funds to Binance, the amount of Bitcoin that must be repaid has risen and doubled Gopax’s debt.
Binance, the largest crypto exchange by volume has finalized plans to sell off its Gopax shares to Megazone. This comes after barely a year of acquiring management rights of Gopax by way of stake acquisition. Gopax, a South Korean cryptocurrency exchange, is among the top five won exchanges in the country but Binance looks set to dump it.
Binance Strategic Restructuring for Compliance
According to a local South Korean news outlet, Binance is in the concluding phase of selling over 62% of its stake. The move will have Binance sell its stake in Streami, the operator of Gopax, thereby holding only about 10% stake.
An anonymous source with firsthand knowledge of the space says Binance’s move is to allow it to restructure its governance processes. This complies with requests by financial authorities as it concerns the proposed real-name account renewal with Jeonbuk Bank. That deal is expected to be sealed in August, hence Binance is eager to conclude the selloff of Gopax this month.
The move by Binance is necessary for the Financial Service Commission in South Korea to process its report. Notably, after acquiring 72.3% of Gopax’s stake last year in February, Binance reported a switch in the largest shareholder to an official. However, the regulatory authorities are raising eyebrows on that move.
The Financial Services Commission has since withheld a decision to accept reports from Binance in the past 15 months. Now, following this major market move, it is likely that the authorities will process the report. Earlier in March, Binance informed the Financial Service Commission of its decision to lower stakes and reorganize its structure,
Financial Challenges and Race against Time
Financial experts stated that Binance must improve its governance structure to finalize the real-name account contract renewal with Jeonbuk Bank which is due next month. Some consider the selloff as the last window of opportunity for both Gopax and Binance to maintain their own exchange status.
There are, however, some financial challenges that need to be sorted out. Notably, Gopax’s capital is a mess given the 56 billion won debt it incurred when FTX Derivatives Exchange collapsed and declared bankruptcy. The implosion of FTX triggered many other firms that entered serious financial strain at the time. Although Binance agreed to offset it during the acquisition, the authorities have rejected the report of change in the largest shareholder.
Meanwhile, due to the delayed inflow of funds to Binance, the amount of Bitcoin that must be repaid has risen and doubled Gopax’s debt. According to an April record, the total debt of Gopax stood at a staggering 118.4 billion won.
Currently, Binance is in a race against time to conclude the renewal of the name change as the deadline for Gopax and Jeonbuk Bank is August 11, exactly one month away.
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