Binance, the world-renowned crypto exchange, is reportedly nearing the final stages of negotiations to sell a majority stake in the local exchange Gopax to South Korea’s cloud service giant, Megazone, as reported by South Korea’s leading news agency, It Chosun, on July 11.
The backdrop of this negotiation is rooted in Binance’s acquisition of a 72.26% stake in Gopax in February last year. Following the acquisition, Binance reported a change in the largest shareholder to a Binance representative in March. However, the decision from financial authorities to accept Binance’s report has been pending for over a year, creating uncertainty in the market.
Financial Services Commission (FSC) officials have reportedly urged the exchange to lower its stake to less than 10% to process the report, prompting Binance to pledge a governance overhaul earlier this year. The urgency of these changes is underscored by the looming deadline for the real-name account renewal contract with Jeonbuk Bank, which is critical for Gopax’s operational continuity.
BF Labs’ Role and Financial Constraints Impacting Binance
BF Labs, a local KOSDAQ-listed company, had once appeared as a possible saviour for the exchange. BF Labs bought an 8.55% stake in Streami (operator of Gopax) last September, thus becoming the second biggest shareholder, intending to add more shares on top. Nonetheless, due to financial difficulties, this plan could not proceed any further and therefore, the current sale talks with Megazone are crucial for both Binance and Gopax.
There is an urgency for this sale to go forward. Gopax is in a dire financial state, and FTX’s collapse only worsened it in 2022, leaving Gopax with a 56 billion won debt. However, Binance promised to offset the loan while awaiting permission from the financial sector regulators that are yet to be given. Besides, as of April this year, the rising price of Bitcoin has seen Gopax’s debt increase almost twofold to 118.4 billion won.
There are major deadlines ahead. The August 11 deadline for renewing real-name accounts is just around the corner, making fast-track regulatory approval ever more pressing. Changes related to account renewals under the revised Special Financial Transactions Act must be reported a month ahead, which puts additional pressure on all parties involved.
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