Binance to sell off GOPAX after yearlong regulatory standstill

Leon Foong, head of Asia Pacific market for Binance / Yonhap

By Lee Kyung-min

Binance, the top global cryptocurrency exchange by trading volume, is moving to sell off its stakes in Streami, the operator of GOPAX, one of the top five cryptocurrency exchanges in Korea, according to market watchers, Wednesday.

Propelling what the market considers an unusual decision is the stalled approval of the large shareholder revision, a request filed by the global exchange in March last year. The Financial Services Commission (FSC) is of the view that Binance falls short of related requirements due to its questionable governing structure and lack of capital, essentially rejecting the request.

Binance is the largest shareholder of GOPAX with a 72.26 percent stake. The figure can rise to up to 80 percent once the global exchange converts 35 billion won ($26 million) in debt receivables into stocks. Binance paid 35 billion won to the GOPAX investors when it acquired the exchange last year.

Whether BF Labs, a Kosdaq-listed intelligent transport system solution provider, will ramp up its stakes and normalize the stagnated operation of GOPAX remains unclear. BF Labs has yet to turn a profit after it acquired an 8.55 percent stake in GOPAX for 5.4 billion won in September of last year.

Little choice

“The sell-off of GOPAX stakes is essentially the last resort,” an industry official said.

The financial authorities will not budge unless the global crypto exchange demonstrates efforts to reduce stakes in the local exchange, the official said.

“Even if the move remains a gesture of submission, it is worth trying.”

The FSC, in the meantime, has outlined a revision to a law governing the crypto exchange operation on Monday in what the market watchers say was a rushed stopgap measure to prevent the recurrence of extended business disruption brought on by regulatory inaction.

Once the revisions are enacted, the FSC will no longer be required to make a decision on approval requests and reviews it receives within 45 days of filing.

Also included was the suspension of a review, if criminal proceedings are underway against business operators seeking the FSC approval.

The same rule will apply when investigations or inspections by the Fair Trade Commission, National Tax Service and the prosecution are ongoing.

Requests filed by foreign entities seeking business operations in Korea can be suspended at the discretion of the Korea Financial Intelligence Unit (FIU) if the entities are under investigation or inspection by their country of origin.

A change in corporate management involving executives will also require FSC approval to take effect.

This was in clear reference to Leon Foong, former CEO of the Asia-Pacific region of Binance, who engaged in the management of Gopax in Korea despite the pending FSC decision last year.