Gopax, a crypto exchange based in South Korea and majority-owned by Binance, one of the largest crypto exchanges globally, allegedly sold its users’ deposit claims at a 50% discount in August 2023. The exchange owes its users a total of 70 billion South Korean won ($51.4 million) due to its involvement with the failed institutional crypto lending firm, Genesis Global, which collapsed in November 2022. So far, Gopax has reportedly paid out 50% of the owed amount to its users. However, the remaining unpaid digital assets, which were valued at 35 billion won during the crypto market’s lowest point in November 2022, have now surged to a total value of 100 billion won at a price of $69,000 per Bitcoin (BTC). In March, it was reported that Gopax is experiencing severe financial difficulties due to its increasing debt liabilities.
Genesis Global, the operator of Gopax’s crypto custody service GoFi, had to suspend withdrawals because it was exposed to losses of $1.2 billion related to the Singaporean hedge fund, Three Arrows Capital. In February 2023, Binance acquired a significant equity position in Gopax, marking its return to the South Korean market. However, the acquisition was put on hold on June 7, 2023, when the United States Securities and Exchange Commission filed a lawsuit against Binance. This prompted a review of the deal by the Financial Service Committee in South Korea.
Recently, Genesis received approval from U.S. bankruptcy courts to distribute $3 billion in cash and cryptocurrency to its creditors. The presiding judge, Sean Lane, rejected an objection raised by Digital Currency Group (DCG), the parent company of Genesis, which argued that the bankrupt subsidiary should only pay its customers and creditors the value of the crypto assets. As a result, DCG will not receive any recovery from Genesis’ bankruptcy proceedings.
In related news, Binance.US successfully appealed to have its money services license in Florida reinstated.