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Gopax, a leading South Korean cryptocurrency exchange majority-owned by Binance, has come under scrutiny for selling users’ deposit claims at half their face value.&nbsp;
According to a May 27 <a href="https://www.hankyung.com/article/202405238552g" rel="noopener noreferrer nofollow">report</a> by Hankyung (Korea Economic Daily), the exchange, which ranks among the top five by market share in South Korea, owes 70 billion South Korean won ($51.4 million) to its users due to its exposure to the failed crypto lending firm Genesis Global.
<h2 id="span-style-font-weight-400-genesis-global-and-gopax-span">Genesis Global and Gopax</h2>
In November 2022, Genesis Global collapsed, <a href="https://thecoinrise.com/binances-gopax-exchange-slashes-losses-with-97-yoy-revenue-boost/" rel="noopener noreferrer nofollow">leaving Gopax with significant financial liabilities</a>. Of the total amount owed to users, Gopax has reportedly managed to pay out 50%.&nbsp;
The remaining unpaid digital assets, valued at 35 billion won during the crypto market’s nadir in November 2022, have since surged in value. As of recent market prices, these assets are worth approximately 100 billion won, given Bitcoin’s price at $69,000.
Gopax’s financial troubles are deeply tied to Genesis Global, which operated Gopax’s crypto custody service GoFi. Genesis halted withdrawals after suffering a $1.2-billion exposure to the ill-fated hedge fund Three Arrows Capital.&nbsp;
A source interviewed by Hankyung revealed,&nbsp;
“We paid with Bitcoin obtained by selling the Genesis claim at a low price to a third party, and we are delaying payment of the remaining 50% of the damage, saying we will pay it after the acquisition of Gopax is completed.”
<h3 id="span-style-font-weight-400-binance-and-acquisition-of-gopax-span">Binance and Acquisition of Gopax</h3>
In February 2023, Binance announced its <a href="https://thecoinrise.com/binance-divests-stake-in-gopax-amid-regulatory-pressures/" rel="noopener noreferrer nofollow">acquisition of a “meaningful” equity position in Gopax</a>, aiming to re-establish its presence in the South Korean market. However, the terms of the deal were not disclosed.&nbsp;
The acquisition faced significant hurdles when, on June 7, 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance. This legal action prompted South Korea’s Financial Service Committee to review the acquisition, causing further delays.
<h2 id="span-style-font-weight-400-genesis-bankruptcy-span">Genesis Bankruptcy</h2>
Amid these challenges, Genesis secured a $3-billion approval in U.S. bankruptcy courts earlier this month to return cash and cryptocurrency to its creditors.&nbsp;
This decision, overseen by Judge Sean Lane, overruled objections from Digital Currency Group (DCG), the parent company of Genesis. DCG had argued that its bankrupt subsidiary should not pay its customers and creditors more than the value of the crypto assets. The ruling leaves DCG without any recovery from Genesis’ bankruptcy proceedings.
The controversy surrounding Gopax highlights the precarious nature of the crypto exchange industry, especially when intertwined with high-risk lending firms like Genesis.&nbsp;
The decision to sell users’ deposit claims at a significant loss has drawn criticism, reflecting the broader financial instability and regulatory challenges facing the sector. As <a href="https://thecoinrise.com/doj-appoints-fra-to-monitor-binance-compliance-over-three-years/" rel="noopener noreferrer nofollow">Binance navigates its legal and regulatory challenges</a>, the future of Gopax and its users’ financial recovery remains uncertain. 
The post <a href="https://thecoinrise.com/gopax-sells-users-deposit-claims-at-half-value-amid-financial-turmoil/" rel="noopener noreferrer nofollow">Gopax Sells Users’ Deposit Claims at Half Value Amid Financial Turmoil</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Gopax Sells Users’ Deposit Claims at Half Value Amid Financial Turmoil

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