Binance-Owned Gopax Owes Users $51.4M Amid Genesis Global Exposure and Acquisition Delays
Summary:
Binance's majority-owned South Korean crypto exchange platform, Gopax, is found to owe users $51.4 million due to exposure to Genesis Global. Gopax allegedly paid only 50% of users' deposit claims, selling the remainder at half value. Remaining debts, initially worth 35 billion won, have surged to 100 billion, leading Gopax into full capital impairment. Acquisition delays and a pending lawsuit contribute to complications, while Genesis plans to refund its creditors with approval from U.S. bankruptcy courts.
Binance's majority-owned platform, Gopax, which ranks among the top five cryptocurrency exchanges in South Korea based on market share, is alleged to have sold their users' deposit claims for just half of their stated worth back in August 2023. On May 27, the local news outlet Hankyung, also known as Korea Economic Daily, reported that Gopax is in debt totaling 70 billion won (equivalent to $51.4 million) to its users due to its involvement with the institutional crypto lending company, Genesis Global, which went bankrupt in November 2022. Gopax has managed to pay back 50% of this hefty sum to its users.
However, the remaining unpaid digital assets, which were valued at 35 billion won at the lowest point of the crypto market in November 2022, have supposedly surged to a stunning 100 billion won, with Bitcoin (BTC) valued at $69,000 per unit. In March, the Korean Times revealed that Gopax was facing full capital impairment due to escalating debt-related liabilities. Genesis, which had suspended withdrawals due to exposure to the failed Singaporean hedge fund Three Arrows Capital, managed Gopax’s crypto custody service, GoFi. A source told Korean Economic Daily that the remaining 50% owed to users was being delayed as Gopax awaits a completed acquisition deal. The source stated, “We paid with Bitcoin obtained by selling the Genesis claim at a low price to a third party..."
In February 2023, Binance purchased a significant equity stake in Gopax. However, by June 7, 2023, a lawsuit from the U.S. Securities and Exchange Commission against Binance had put the acquisition on hold, leading to a review by South Korea's Financial Service Committee. This month, Genesis was successful in obtaining approval from U.S. bankruptcy courts to provide cash and cryptocurrency refunds to its creditors, totalling $3 billion. In a controversial move, Judge Sean Lane refuted a challenge from DCG, Genesis' parent company, which stated that its bankrupt subsidiary should not pay its clients and creditors more than the value of the crypto assets. This decision leaves DCG without any financial recovery from the bankruptcy proceedings of Genesis.
Published At
5/27/2024 8:44:43 PM
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