In its news dated July 11, South Korean news agency The Chosun Ilbo announced that Binance is in the final stages of negotiations with South Korean cloud service provider Megazone to sell its majority stake in Gopax. According to the news, the main reason behind the sale is to improve Gopax’s management structure in line with the demands of South Korean authorities.

When Binance announced that it had acquired 72.26% of Gopax in early 2023, it was said that it was aiming to make a big return to the South Korean cryptocurrency market. However, this acquisition contradicted Binance’s suspension of many operations in the Asian country in 2021.

Even though the acquisition took place, Binance’s plans were disrupted. South Korean authorities rejected the capital injection and the change of the largest shareholder. Binance’s regulatory problems in the US and its legal battle with the US Securities and Exchange Commission were influential behind this decision. This situation increased the suspicions of South Korean officials against Binance.

Now, the aborted relationship with Gopax raises questions about Binance’s future in the South Korean market. It is thought that this decision may also be related to the renewal of the real-name account agreement between Jeonbuk Bank and Gopax, which will expire in August. If this agreement is not renewed, Gopax’s ability to serve its South Korean user base may be restricted.

Gopax was significantly affected by the collapse of cryptocurrency exchange FTX in 2022. Immediately after this incident, Gopax was forced to suspend principal withdrawals and interest payments on its decentralized finance (DeFi) service. Gopax’s DeFi service included products from the then-bankrupt crypto lending company Genesis Global Capital.

Before the bankruptcy, Genesis’ parent company, Digital Currency Group, was Gopax’s second-largest shareholder and a key business partner. Gopax’s GoFi product was also offered thanks to this partnership. According to The Chosun Ilbo’s report, Gopax’s total debt was 118.4 billion South Korean won (approximately US$ 86 million) as of April 2024.

Binance’s withdrawal from Gopax sparks speculation about the future of foreign investments in the South Korean cryptocurrency market. This move could be a sign that other cryptocurrency exchanges may face similar problems.

On the other hand, it should be emphasized that Binance did not completely withdraw from the South Korean market, but only reduced its shares. However, this creates uncertainties about Binance’s future plans and strategy in South Korea. The outcome of the collaboration with Gopax could also be an indication of how far Binance has strayed from its ambitions in the Asian market.