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Binance-backed Gopax sold Genesis claims at half value

According to a May 27 report by local news agency Hankyung, Gopax owes its users a total of 70 billion South Korean won ($51.4 million) due to exposure to the failed crypto lender Genesis Global, which collapsed in November 2022. Gopax has allegedly paid out 50% of this amount to users.

The remaining unpaid digital assets, valued at 35 billion won during the crypto market’s nadir in November 2022, have since surged to a total of 100 billion won, with Bitcoin prices reaching $69,000. In March, the Korean Times reported that Gopax is in a “state of complete capital impairment” due to the increase in debt liabilities.

The financial health of Gopax was still impacted by its involvement with Genesis Global Capital. Genesis, which operated Gopax’s crypto custody service GoFi, suspended withdrawals in November 2022 following a liquidity crisis tied to the collapse of FTX.

A source interviewed by Hankyung commented: “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.”

The Seoul-based trading platform, which is among South Korea’s five fully licensed crypto exchanges, saw its net losses decrease to 51.3 billion Korean won ($37 million) in 2023 from 90.6 billion won in 2022.

In February 2023, Binance acquired a majority stake in Gopax without disclosing the deal’s terms, marking Binance’s return to the South Korean market. However, a lawsuit by the United States Securities and Exchange Commission against Binance stalled the acquisition, prompting South Korea’s Financial Services Committee to review the deal.

Earlier this month, Genesis secured a $3-billion approval from U.S. bankruptcy courts to return cash and cryptocurrency to its creditors. Presiding judge Sean Lane overruled an objection by Digital Currency Group (DCG), Genesis’s parent company, which argued that its bankrupt subsidiary should limit payments to customers and creditors to the value of the crypto assets. This decision leaves DCG with no recovery from Genesis’ bankruptcy proceedings.

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