Gopax, a Binance-owned cryptocurrency exchange ranked among the top five in South Korea regarding market share, allegedly sold deposit claims belonging to its users for half their nominal value in August 2023
Gopax owes its users 70 billion won ($51.4 million), as the Korea Economic Daily reported on May 27. The obligation stems from Gopax’s users’ exposure to the defunct institutional cryptocurrency lending firm Genesis Global, which ceased operations in November 2022. According to reports, Gopax has distributed 50% of that sum to its subscribers.
Nevertheless, the value of the remaining unpaid digital assets, which peaked at $35 billion in November 2022 at the nadir of the cryptocurrency market, has reportedly increased to a staggering 100 billion won for $70,158 per Bitcoin BTC.
. Due to the increase in debt liabilities, Gopax is reportedly in a “state of complete capital impairment,” as reported by the Korean Times in March.
Genesis, which suspended withdrawals due to a $1.2 billion exposure to the unsuccessful Singaporean hedge fund Three Arrows Capital, operated the cryptocurrency custody service GoFi for Gopax. According to a source consulted by Korean Economic Daily:
“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.”
Without disclosing the terms of the transaction, Binance acquired a “significant” equity stake in Gopax in February 2023, thereby reestablishing the cryptocurrency exchange’s presence on the South Korean market.
A lawsuit filed against Binance by the U.S. Securities and Exchange Commission on June 7, 2023, halted the acquisition and prompted the Financial Service Committee of South Korea to review the transaction.
Genesis obtained a $3 billion approval from U.S. bankruptcy courts earlier this month to reimburse its creditors for cash and cryptocurrency. The objection put forth by DCG, the parent company of Genesis, that its insolvent subsidiary ought to remunerate its customers and creditors no more than the value of the crypto assets was dismissed by the presiding judge, Sean Lane. As a result, DCG cannot recuperate from Genesis’ bankruptcy proceedings.
