Binance’s plan to buy a South Korean crypto exchange Gopax faces regulatory hurdles due to the SEC lawsuit against the global crypto giant.
In February 2021, Binance announced that it had acquired a majority stake in Gopax and that it was spending funds from its industry recovery initiative on the acquisition.
Binance and its partners created the industry recovery initiative, a fund to support the crypto industry’s development and growth.
The fund also aims to help victims of hacking incidents, fraud, and other malicious activities in the crypto space.
Binance planned to use its expertise and resources to help Gopax expand its market share and improve its security and compliance standards.
Additionally, Binance plans to cover the shortfall of Gopay, left with bad debt following the collapse of another crypto exchange FTX.
South Korea’s major financial regulator-The South Korean Financial Services Commission (FSC), must approve Binance’s acquisition of Gopax.
The FSC oversees the compliance of crypto exchanges with the new anti-money laundering (AML) and reporting regulations that came into effect in March 2021.
However, the FSC has delayed sanctioning the transfer of ownership, according to local media outlet Newspim. The FSC has cited several reasons for the delay, including:
- The ongoing investigation into potential money laundering activities involving Binance by several countries, such as Germany, Japan, Singapore, and the UK.
- The US Securities and Exchange Commission (SEC) filed a recent lawsuit against Binance and its CEO, Changpeng Zhao, for allegedly violating securities laws and misappropriating customer assets.
- The possibility of asset seizure by the US government, if Binance loses the lawsuit could affect the funds being used to make Gopay whole.
The regulator has decided to track the progress of the SEC lawsuit closely and await clarity on the matter before approving the acquisition.
The FSC has also asked Gopax to submit a revised business change report that reflects the current situation.
This delay could create uncertainty and frustration for customers and investors of both exchanges. Customers of Gopay may have to wait longer for their payments to be processed and their debts to be settled.
