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CityLabs, a company listed on the KOSDAQ stock exchange, has stepped in as a rescue investor for the South Korean cryptocurrency exchange Gopax.The company announced last Friday that it has <a href="https://www.news1.kr/articles/5180800" rel="noopener noreferrer nofollow">acquired</a> a total of 76,308 shares of Streami, the operator of Gopax, securing an 8.55% stake in the company. The investment amounts to a total value of KRW 5.4 billion (approximately $4 million).<h2 id="header-0">Gopax’s turbulent history</h2>Gopax has recently been facing public and regulatory scrutiny due to its internal struggles, most notably undergoing major changes in leadership earlier this year following its acquisition by Binance, with Lee Jun-haeng resigning and Binance’s Asia Pacific Head, Leon Sing Foong, taking over.After this event, Streami submitted reports to the Financial Intelligence Unit (FIU) under the Financial Services Commission (FSS) in line with requirements to inform the regulatory body about such changes. However, due to <a href="https://medium.com/&#64;coinness.gl/binance-apac-head-urges-the-korean-fiu-to-approve-gopaxs-exec-changes-253fd1ada06f" rel="noopener noreferrer nofollow">delays in the FIU’s approval process</a> likely influenced by Binance’s various legal and regulatory challenges, there was yet another leadership transition — Foong stepped down, and Lee Joong-hoon, Gopax’s former Vice President, took over. Notably, Foong recently <a href="https://medium.com/&#64;coinness.gl/binance-apac-head-resigns-amid-regulatory-challenges-caa25ca8a12c" rel="noopener noreferrer nofollow">left Binance</a> altogether amid regulatory crackdowns.During this process, Gopax also struggled to make principal and interest payments on its own decentralized finance (DeFi) service, GOFi, in the wake of last year’s <a href="https://www.kedglobal.com/cryptocurrencies/newsView/ked202211170017" rel="noopener noreferrer nofollow">FTX collapse</a>. The amount of customer funds locked in GOFi totals KRW 56.6 billion, according to an announcement made by Gopax in April. Binance acquired a stake in Gopax on the condition that it would inject enough capital into Gopax to repay this amount in full.<h2 id="header-1">CityLabs steps in</h2>As a result, there have been speculations that a Korean company would invest in Gopax and deliver the exchange from its woes. Some even predicted that this company might become a major shareholder, although CityLabs has acquired only an 8.55% stake due to the fact that the funds required to do so far exceed CityLabs’ annual revenue.Last year, CityLabs reported a consolidated revenue of KRW 28.4 billion and an operating loss of KRW 6.1 billion. Although its revenue increased by 2% compared to the previous year, operating losses grew by 46.9%. While the company may not have sufficient funds at present to become a major shareholder, there lies the possibility that it may increase its stake in the future.The acquisition seems to be driven by CityLabs’ interest in blockchain businesses and the crypto market. While it currently specializes in intelligent transportation systems (ITS), it was formerly Dayli Blockchain, which was affiliated with the crypto exchange Coinone and Dayli Financial Group (now known as Gowid). In 2017, Yellow Mobile became the largest shareholder of Dayli Financial, and in February 2018, it became the largest shareholder of DailyBlockchain, making Dayli Blockchain its subsidiary. Coinone was also a subsidiary of Yellow Mobile at the time. All of these ownership relations have now been restructured.CityLabs has thus been involved in the blockchain industry for some time now with previous connections to cryptocurrency exchanges while also offering decentralized identity (DID) and blockchain as a service (BaaS) products. Observations point to the possibility that its history has influenced its decision to invest in Gopax.“We acquired shares to secure an entry point into the crypto market and position ourselves as a major player,” the company said in a statement.Meanwhile, financial authorities are considering plans to examine the eligibility of major shareholders when reviewing applications from crypto businesses.

CityLabs Secures 8.55% Stake in Gopax

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