South Korean crypto exchange Gopax, a major player in the region and majority-owned by Binance, has come under fire for reportedly selling its users’ claims against failed crypto lender Genesis Global at a significant discount.
The Situation
- According to a May 27th report by Korean news agency Hankyung, Gopax owes roughly 70 billion won (approximately $51.4 million) to its users stemming from exposure to Genesis, which collapsed in November 2022.
- Gopax, one of the top five crypto exchanges in South Korea by market share, is accused of selling user claims tied to Genesis at a steep 50% loss.
- The exchange allegedly used Bitcoin obtained from selling the Genesis claims at a low price to fund the partial repayments.
The Controversy
- This move by Gopax has sparked outrage among its users, who feel they are being unfairly burdened by the losses.
- The decision to sell the claims at a discount raises questions about transparency and potential conflicts of interest.
- The timing also adds to the controversy, as Gopax was acquired by Binance in February 2023, with the deal facing regulatory hurdles later that year.
Impact and Implications
- This incident erodes trust in Gopax and potentially the wider South Korean crypto market.
- It highlights the risks associated with crypto lending platforms and the importance of user protection.
- The situation is likely to be monitored by South Korean financial regulators, who have already been scrutinizing the crypto industry.
Uncertainties Remain
- Gopax has reportedly delayed paying the remaining 50% to users, citing the incomplete acquisition by Binance.
