Gopax, a top-five South Korean crypto exchange by market share and majority-owned by Binance, reportedly sold its users’ deposit claims for half of their face value in August 2023.
According to a May 27 post by local news agency Hankyung, or Korea Economic Daily, Gopax owes a total of 70 billion South Korean won ($51.4 million) to its users stemming from exposure to failed institutional crypto lending firm Genesis Global, which collapsed in November 2022. Of that amount, Gopax has reportedly paid out 50% to users.
However, the remainder of unpaid digital assets, worth 35 billion at the nadir of the crypto market in November 2022, have allegedly soared to a total of 100 billion won at a price of $69,000 per Bitcoin (BTC). In March, Korean Times reported that Gopax is currently in a “state of complete capital impairment” due to the increase in debt liabilities.
Genesis, which halted withdrawals due to a $1.2-billion exposure to the ill-fated Singaporean hedge fund Three Arrows Capital, was the operator of Gopax’s crypto custody service GoFi. A source interviewed by Korean Economic Daily commented:
“We paid with Bitcoin obtained by selling the Genesis claim at a low price to a third party, and we are delaying payment of the remaining 50% of the damage, saying we will pay it after the acquisition of Gopax is completed.”
In February 2023, Binance purchased a “meaningful” equity position in Gopax without revealing the terms of the deal, setting a return for the crypto exchange to the South Korean market.
However, by June 7, 2023, a United States Securities and Exchange Commission lawsuit against Binance had stalled the acquisition, prompting a review of the deal by South Korea’s Financial Service Committee.
Earlier this month, Genesis secured a $3-billion approval in U.S. bankruptcy courts to return cash and cryptocurrency to its creditors. Presiding judge Sean Lane overruled an objection raised by Digital Currency Group (DCG), the parent company of Genesis, which argued that its bankrupt subsidiary should pay its customers and creditors no more than the value of the crypto assets. The move leaves DCG with no recovery from Genesis’ bankruptcy proceedings.
Related: Binance.US wins appeal to reinstate Florida money services license
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