SEC lawsuit against Binance stalls Gopax acquisition deal in South Korea

The FSC rejected Gopax’s executive change report filed on March 7 and claimed it was very difficult to accept the acquisition requests amid accusations of securities laws violations.

The United States Securities and Exchange Commission’s (SEC) lawsuit against Binance could damage the crypto exchange’s business opportunities in South Korea.

A report published in a South Korean daily suggests that the Financial Service Committee (FSC), the financial watchdog of South Korea, is reviewing Binance’s acquisition of the local crypto trading platform Gopax. Binance acquired a majority stake in Gopax in February earlier this year intending to re-enter the South Korean crypto market after two years.

The FSC has reportedly suspended Gopax’s executive change report filed on March 7, citing the recent SEC lawsuit. The report detailed the nomination of three Binance members as inside directors of Gopax, including Leon Singh Poong, CEO of Binance Asia Pacific.

FSC in its review of the Gopax deal claimed that it was very difficult to accept the acquisition request at this point given the alleged accusations of securities law violations and further requests by the SEC to freeze Binance.US assets. One of the executives from FSC said that it is important to look at the SEC lawsuit while adding:

“It is cautious to say that the report is being reviewed internally,”

Binance’s Gopax acquisition was not just about the crypto exchange’s re-entry into South Korea but also a revival of the troubled local crypto trading platform. Gopax halted withdrawals of principal and interest payments from its decentralized finance (DeFi) service GoFi in November 2022 after the collapse of the FTX crypto exchange and bankruptcy of Genesis Global Capital.

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Genesis’ parent company Digital Currency Group was reportedly Gopax’s second-largest shareholder and a key business partner, providing its GoFi product. The acquisition deal by Binance promised to funnel new capital into the Gopax exchange for customer withdrawals and interest payments for GoFi.

The SEC lawsuit against Binance accused the crypto exchange of co-mingling customers’ funds and violating various securities laws. The SEC had filed 13 charges against the exchange and its CEO Changpeng Zhao.

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