Binance is facing allegations of selling Gopax user deposit claims in Genesis Global without creditor approval, as reported by South Korean news outlet Hankyung.
Binance is now the largest shareholder of the South Korean exchange Gopax. Last year, Binance-backed Gopax reportedly sold user claims in Genesis Global for less than half their face value. Gopax owes its users 70 billion South Korean won ($51.4 million) due to exposure to Genesis Global, which collapsed in November 2022. Gopax has allegedly paid out 50% of this amount to users.
In February 2023, Binance acquired a majority stake in Gopax without disclosing the deal’s terms, marking its return to the South Korean market. However, a lawsuit by the United States Securities and Exchange Commission against Binance stalled the acquisition, prompting South Korea’s Financial Services Committee to review the deal.
Initially, Binance had promised to fully cover losses from Gopax’s crypto custody service, GOFi, managed by Genesis. In November 2022, Genesis suspended withdrawals following a liquidity crisis tied to the collapse of FTX.
Binance’s Industry Recovery Initiative (IRI) covered the first compensation phase, totalling 1.5 billion won.
In August 2023, further repayments were made by selling GOFi user claims at a significant discount to a third party. Binance and Gopax reportedly concealed this transaction. No announcements were made regarding the settlement with Genesis.
GOFi users collectively lost assets valued at 70 billion Korean won ($57 million). The remaining unpaid digital assets, valued at 35 billion won during the crypto market’s low in November 2022, have since surged to 100 billion won, with Bitcoin prices reaching $69,000. So far, Binance and Gopax have compensated only about half of the damages.
Earlier this month, a New York bankruptcy court approved a $2 billion settlement between Genesis and the state attorney general’s office. This settlement aims to return 77% of customer claims to creditors.
Gopax’s financial health has been severely impacted by its involvement with Genesis. In March, the Korean Times reported that Gopax is in a “state of complete capital impairment” due to increased debt liabilities.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
