- South Korea’s FIU reopens review of Binance’s Gopax acquisition, aiming for approval by 2025.
- Binance’s 67% stake in Gopax aims to restore market confidence after a liquidity crisis.
- South Korea tightens crypto regulations while reconsidering Binance’s return to the market.
South Korea’s FIU has restarted the investigation into Binance’s acquisition of South Korean crypto exchange Gopax. This suggests that South Korean authorities are now reviewing whether Binance would be able to become the largest shareholder of South Korea. If the review is passed, Binance would return to the South Korean market by Dec. 2025.
The FIU review is focused on personnel changes in Gopax’s leadership and shareholder structure. There’s no specific law in South Korea for taxing large cryptocurrency holders. Accordingly, this review will serve as a substitute for a decision under the platform controlling shareholder test. A certification from the FIU would be a pivotal move if exchange is to resume trading.
Binance Steps In to Restore Trust After Gopax Crisis
The platform initially acquired Gopax back in February 2023 with an acquisition of 67% of the company. The move is meant to shore up the platform after its partner, Genesis Global Capital, halted withdrawals of a product Gopax had created called GoFi.
Gopax users have been unable to access nearly $47 million (₩56.6 billion) since the suspension. The platform’s involvement was also seen as an effort to restore market trust.
Also Read: South Korea’s FSC Cracks Down on Crypto Lending, Orders Exchanges to Suspend Services
Binance’s efforts to revive Gopax may have steadied the exchange, but it faced regulatory trouble elsewhere — including in the U.S. Binance was sued on for fraud by U.S. regulator the Securities and Exchange Commission (SEC) in mid-2023.
The charges alleged that Binance had sold unregistered securities to American investors. The platform was already embroiled in accusations of violating anti-money laundering (AML) laws and now faces even more scrutiny.
Binance Pays $4.3B Fine; South Korea Reconsiders Gopax Deal
Binance’s response to those problems had been to cut $4.3 billion. The settlement was one of the largest fines for a cryptocurrency company. It was an important move toward cleaning up platform’s regulatory status. South Korean authorities had halted the approval of Gopax after this resolution, but have since hinted that they may change course anyway.
As of now, cash-to-crypto transactions can be performed through just a few South Korean exchanges such as Gopax. Such businesses are very heavily regulated with respect to KYC/AML. Based on a review of the FIU, they will need to find out whether platform’s stake in Gopax is consistent with Korea’s financial integrity regulations.
The review also reflects South Korea’s changing stance on foreign involvement in its cryptocurrency market. Crypto regulations have been tightening up in South Korea.
In August 2023, it halted all services pending the formation of a more comprehensive legal framework. Meanwhile, regulators are finalizing approval for the country’s first spot crypto exchange-traded funds (ETFs).
Local exchanges are also putting in work to secure their network. Upbit’s operator, Dunamu has recommended to big investors a custody system aimed at preventing all the internet-related risks. These are following the overarching South Korea’s upping security, transparency and regulation of the digital asset industry.
Also Read: South Korea’s $657 Million Exit from Tesla Signals a Big Crypto Pivot
