Gopax, a major cryptocurrency exchange in South Korea and predominantly owned by Binance, reportedly sold its users’ deposit claims at a 50% discount in August 2023. As per a report by local news agency Hankyung, Gopax owes its users a total of 70 billion South Korean won ($51.4 million) due to its connection with the failed institutional crypto lending firm Genesis Global, which collapsed in November 2022. Gopax has reportedly paid out 50% of this amount to its users.
However, the remaining unpaid digital assets, which were worth 35 billion won during the lowest point of the crypto market in November 2022, have now increased to a total of 100 billion won, valued at $69,000 per Bitcoin (BTC). In March, the Korean Times reported that Gopax is currently facing a severe financial crisis due to its mounting debt.
Genesis, the operator of Gopax’s crypto custody service GoFi, had to halt withdrawals because of its $1.2 billion exposure to the failed Singaporean hedge fund Three Arrows Capital. In February 2023, Binance acquired a significant equity position in Gopax, but the acquisition was put on hold by a lawsuit filed by the United States Securities and Exchange Commission against Binance on June 7, 2023. This legal action prompted South Korea’s Financial Service Committee to review the acquisition deal.
Earlier this month, Genesis received approval from U.S. bankruptcy courts to return $3 billion in cash and cryptocurrency to its creditors. The presiding judge, Sean Lane, overruled an objection made by Digital Currency Group (DCG), the parent company of Genesis, which argued that the bankrupt subsidiary should only repay its customers and creditors based on the value of the crypto assets. As a result, DCG will not recover any funds from Genesis’ bankruptcy proceedings.
In related news, Binance.US successfully appealed to reinstate its money services license in Florida.