Binance reportedly to sell stake in South Korean exchange Gopax

Binance is reportedly in final-stage talks to sell a majority stake in South Korean crypto exchange Gopax to local cloud service provider Megazone, according to a July 11 report from The Chosun Ilbo.

The global crypto exchange is looking to reduce its 72.6% ownership in Gopax to around 10% in response to requests from South Korean financial authorities to improve the exchange’s governance structure. The stake sale comes as Gopax faces an August 11 deadline to renew its real-name account contract with Jeonbuk Bank, which was initially signed in August 2022 for a two-year term.

Binance acquired its controlling stake in Gopax in February 2023 as part of efforts to re-enter the South Korean market after ceasing multiple operations there in 2021. However, South Korean regulators have so far denied approval for the change in majority ownership, effectively blocking Binance’s capital injection into Gopax.

An unnamed industry insider told The Chosun Ilbo that Binance is pursuing the stake sale to meet regulatory requirements for governance improvements ahead of Gopax’s real-name account renewal. The source indicated a deal could be finalized this month.

The regulatory hurdles have left Gopax in a precarious financial position. As of April 2024, Gopax reportedly had total liabilities of 118.4 billion won ($91.5 million). This includes 63.7 billion won in unpaid debts to users of its GOFI product and a 36.4 billion won loan from Binance intended to help repay those users.

For Gopax, securing the real-name account renewal is critical to maintaining its status as a won-based cryptocurrency exchange in South Korea. The stake sale to Megazone, if approved, could pave the way for new capital investment and regulatory approval needed to shore up Gopax’s finances and operations.