South Korea suspends Binance’s acquisition of Gopax
South Korea’s financial regulator has decided to halt the evaluation process of Binance’s proposed acquisition of the country’s troubled crypto exchange Gopax, citing the ongoing lawsuit against it in the US.
Binance had submitted the so-called ‘executive change report’ on March 7 as part of the due diligence requirements to buy a controlling share in Gopax. The report sought the appointment of three Binance executives as inside directors as part of ownership transfer.
During its initial assessment of the transaction, the Financial Services Commission (FSC) delayed the approval over allegations of money laundering at Binance. Today, the FSC cited the recent accusations of securities law violations against Binance and the request from the SEC to freeze its US assets as contributing factors to their decision.
The regulator has decided to closely monitor the ongoing case, taking the SEC’s lawsuit into consideration and its possible implications for evaluating the acquisition.
“Binance has bases in many places, and we understand that funds for Gopay repayments are coming from a holding company based in Ireland. The funds are not solely from Binance, which belongs to a holding company in the United States, but are a relief industry fund created by contributions from partners and early investors,” an SFC spokesperson told local media outlet Newspim.
Earlier this year, Binance purchased the equity stake from Gopax’s largest shareholder, Lee Jun-hang, and the deal was originally set to be announced last year. However, the takeover was postponed for further due diligence over equity value calculations.
Pending the official approval of Korean authorities, Binance was reportedly in the final steps to complete the transaction, which would allow it to operate once again in the South Korean crypto market. South Korean authorities apply strict new rules to crypto businesses to minimize the risks of money laundering and market manipulation, which went into full effect last year.
The collapse of crypto exchange FTX has had an impact on South Korean exchanges, including GOPAX. The Seoul-based platform suspended payments in its DeFi service GOFi, which was introduced in partnership with crypto lender Genesis Global Capital.
CEO Changpeng Zhao revealed earlier in November that Binance is preparing to register under South Korean financial authorities by complying with local regulations. The exchange had previously opened a local office four years ago but had to cease its crypto trading services in December 2020.
