Binance, the world’s largest cryptocurrency trading platform, has reaffirmed its commitment to resurrecting the ailing domestic exchange, Gopax. The Korean exchange finds itself in dire straits with complete capital erosion, and Binance is set to play a pivotal role in its revival.
Binance Rescues Gopax with Loan-to-Equity Conversion
According to a recent report from local news outlet Dailian, Binance is gearing up to convert all Gopax loans paid in the previous year into equity, marking a significant step in the restructuring plan. Steve Kim, Binance’s Asia-Pacific regional director, outlined the ambitious strategy during a roundtable discussion on the ‘2024 Web3 market outlook’ held online on the 30th.
Kim expressed confidence in the plan, stating, “We plan to do it first, and accordingly, the shareholding ratio will increase significantly.” This move positions the exchange to become the second-largest shareholder in Gopax. Kim further detailed that the cryptocurrency giant would later sell these shares to carefully selected partners who align with and comprehend domestic regulatory frameworks.
The initiative comes as Gopax faces hurdles in the aftermath of the liquidity crisis experienced by U.S.-based Genesis Capital, a prominent fund manager. The exchange stepped in, acquiring a substantial 72.26% stake in Gopax in February of the preceding year. The Korean exchange, previously known for its virtual asset deposit management service ‘GoFi,’ has been undergoing significant changes under Binance’s ownership.
However, Gopax’s attempts to report alterations to its virtual asset business have been met with delays from the Financial Services Commission, which cites concerns over Binance’s alleged money laundering risks. Last year, the U.S. Treasury found Binance guilty of money laundering, resulting in a hefty fine of $4.3 billion.
In response to regulatory challenges, the exchange has proposed a comprehensive plan involving the conversion of Gopax loans into equity and subsequent sale to a domestic entity. This strategic move aims to allay apprehensions about money laundering risks and national wealth outflow. As the situation unfolds, City Labs emerges as a potential major stakeholder post-Binance’s divestment.
Despite regulatory skepticism, the exchange remains optimistic that reducing its stake will pave the way for smoother acceptance of Virtual Asset Service Provider (VASP) reporting by regulatory authorities, underscoring the dynamic and complex nature of the ongoing financial maneuvering in the cryptocurrency sphere.
Related Reading | Ripple’s CEO Slams Sensationalism: No Hack, Just Hype