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.
  • The exchange’s future remains uncertain as it navigates financial challenges and regulatory scrutiny.

Looking Ahead

The Gopax situation serves as a cautionary tale for crypto investors and underscores the need for robust regulations in the industry. As investigations unfold, it remains to be seen how Gopax will address user concerns and what long-term impact this incident will have on the South Korean crypto landscape.