Binance’s deal to buy South Korean crypto exchange Gopax is thwarted by the potential bankruptcy of Genesis. Gopax currently owes its customers approximately $47 million.
Binance’s South Korean investment faces Genesis hurdle
The lead exchange’s move to the South Korean market was blocked due to Genesis’ bankruptcy. Binance has been in talks for a while to buy Gopax, the country’s fifth largest exchange. With this move, the exchange plans to enter the South Korean cryptocurrency market ‘back door’. However, the FTX and Genesis crises that have occurred in recent months have directly affected the Binance-Gopax deal.
Currently, GoFi, Gopax’s wealth management product, owes its customers approximately $47 million. If a deal is not reached, investors will suffer huge losses, which means a loss of reputation for Binance.
According to Decenter, Binance has recently completed due diligence on the acquisition of Gopax. Gopax is one of the five major South Korean exchanges (Upbit, Bitsum, Coinone, Corbit, Gopax). Binance previously announced the acquisition of exchanges in Japan and Indonesia.
— Wu Blockchain (@WuBlockchain) January 2, 2023
cryptocoin.com As you follow, Binance completed its due diligence on the acquisition of Gopax on Monday as it prepares to enter the South Korean market. Also, Binance is about to buy a majority stake in Gopax from CEO Lee Jun-haeng, who owns 41.2% of the company. The leading exchange is then considering acquiring Gopax on the basis of GoFi refund support. However, according to current developments, an employee of Binance reported that the acquisition of Gopax is not completed. Binance will have to wait for a while until the issues with Genesis are resolved.
How did Genesis prevent it?
Following the bankruptcy of FTX, crypto lending firm Genesis, a subsidiary of Digital Currency Group, suspended withdrawals. Gopax’s Genesis-linked GoFi earning product also experienced withdrawal issues. DCG, the parent company of Genesis, is Gopax’s second largest shareholder. As a result, Gopax stated that it is working closely with Genesis and its parent company DCG to resolve refund issues. The situation got worse as Genesis’ ties to FTX and Alameda Research were revealed.
Currently, Genesis does not have sufficient reserves to return GoFi funds. South Korea’s wealth management product GOFi needs to reimburse its customers about $47 million. This debt was previously estimated at around $23 million, but recent reports suggest that figure has nearly doubled. If the Binance purchase fails, Gopax investors may face a loss of $471 million…
According to CEO Chosun in his statements on January 6, Gopax is facing a deficit of approximately $471 million in its deposits on Genesis. Gopax’s funds remained in Genesis before suspending withdrawals on November 16, 2022 due to the FTX collapse. However, the chances of recovering locked-in funds drop as Genesis is reportedly looking to file for bankruptcy. This means that we will experience the first FTX event of the new year.