World Crypto Global
- Written by: Jared Kirui
- Thu, 11 Jul 2024
- Israel
Binance is finalizing the sale of its majority stakein crypto exchange Gopax to South Korean cloud service provider Megazone, localmedia publication The Chosun reported. This decision is pivotal for Gopax, oneof Korea's top five won exchanges, as it faces the risk of delisting ifgovernance issues remain unresolved.Enhancing GovernanceCurrently, Binance holds a 72.6% stake in Streami, theoperator of Gopax. However, the exchange plans to reduce its stake to around10% by selling shares to Megazone. This move is reportedly part of the exchange's initiative to enhance its governance structure, a requirement set by financialauthorities to process a change report ahead of renewing Gopax's real-nameaccount contract with Jeonbuk Bank.A virtual asset industry insider told the mediapublication that the sale aims to meet the demands of financial authorities,who have delayed approving Binance's change report for over a year. TheFinancial Services Commission has reportedly insisted that Binance reduce itsstake to less than 10% to proceed with the report. Binance responded in March,committing to restructure its governance and lower its Gopax stake.Previously, BF Labs, a domestic KOSDAQ-listed company,emerged as a potential partner for Binance. BF Labs acquired an 8.55% stake inStreami and sought to increase its holdings. However, funding issues haltedfurther acquisitions, leaving Binance to seek other solutions to comply withregulatory requirements.The urgency of this stake sale is underscored by thelooming deadline for Gopax's real-name account renewal with Jeonbuk Bank onAugust 11. The revised Special Financial Transactions Act mandates thatexchanges report changes related to real-name account renewals at least onemonth prior to signing the contract. Thus, a decision on the renewal must bereached by the end of this month.GOPAX Faces Financial DistressGOPAX is currently experiencing financialdistress, with total debt reaching 118.4 billion won as of April this year. Thedebt situation worsened due to the rise in Bitcoin prices and the fallout fromthe FTX bankruptcy in 2022, which left Gopax with significant liabilities.Although Binance agreed to cover Gopax's 56 billion won debt during theacquisition, this agreement hinged on financial authorities allowing Binance'sentry.A Megazone representative mentioned that they areexploring various forms of collaboration, including equity acquisition, butemphasized that no concrete decisions have been made regarding the process ortiming.This sale represents a critical time for Binanceand Gopax. Successfully navigating this transaction and securing the approvalof financial authorities is essential to maintaining their status as a keyplayer in Korea's won exchange market.This article was written by Jared Kirui at www.financemagnates.com.
