Binance secretly sold its Korean affiliate. gopaxSouth Korean media outlet Hankyung, citing sources familiar with the matter, reported Monday that Genesis Global last year charged user deposits at less than half the face value.
Last year, Binance became the largest shareholder of Gopax, one of the five largest cryptocurrency exchanges in Korea. In exchange for purchasing Gopax shares at a discount, Binance promised to fully recover investors’ losses resulting from Gopax’s cryptocurrency custody service GOFi exposed by the collapse of Genesis Global Capital in 2022.
GOFi users lost a total of 70 billion won, or $57 million worth of assets at the time. Gopax and Binance have so far compensated for about half of the damages.
that much local reportingCiting sources familiar with the transaction, Binance initially promised to pay GOFi Genesis’ losses in full through the Industrial Recovery Initiative (IRI), which amounted to 1.5 billion won for the first payment alone.
Sources claimed that Binance made a secondary repayment by selling GOFi user deposit claims to a third party at a significantly discounted price of less than 50% in August 2023, rather than through IRI. This transaction is a transaction without consent. The report said it was concealed from investors by Binance and Gopax.
Earlier this month, a New York bankruptcy court approved $2 billion in damages. agreement The deal between Genesis and the state Attorney General’s Office will see 77% of customers’ claims returned to creditors.
Gopax has made no announcement regarding Genesis’ settlement because it has already sold user claims at “giveaway prices,” sources told Hankyung. The surge in Bitcoin prices during the recent bull market would have increased the value of these claims, resulting in GOFi investors suffering greater losses if they had not been sold, Hankyung reported.
The value of the remaining 50% of GOFi debt that has not yet been repaid, which was originally valued at 35 billion won at the time of Genesis’ collapse, is currently estimated to be worth more than 100 billion won per Bitcoin value increase, the report said. Hankyung added that Binance and Gopax’s deal to fully repay Genesis losses did not specify an exact timeline for compensation.
Gopax did not immediately respond to The Block’s request for comment. Binance did not comment on The Block’s inquiry regarding this issue and instead forwarded the inquiry to Gopax.
regulatory difficulties
After the acquisition, local Korean authorities repeatedly delay Gopax’s transfer of ownership to Binance has reportedly been approved due to concerns surrounding legal issues in the United States.
Steve Kim, Binance’s director of business development for Asia Pacific, said during a roundtable discussion in January that the global exchange is reduce stake It aims to ease Gopax’s debt and compliance pressures by becoming its second-largest shareholder. Binance CEO Richard Teng visited Seoul in March to meet with financial regulators, local media reported.
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