Just-In: Binance Plans Selling Its GOPAX Stakes To MegaZone

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As a researcher with a background in cryptocurrencies and exchange regulations, I believe that Binance’s decision to sell its stake in GOPAX is a strategic move aimed at addressing regulatory challenges and improving governance structures. The delay in approval of Binance’s report by financial authorities last year has put pressure on the exchange to find a solution to comply with the request for a change in the largest shareholder.

Binance, the prominent cryptocurrency exchange, is generating buzz with its intention to offload its 72.6% ownership in South Korean crypto exchange GOPAX. As reported recently, Binance intends to sell this stake to MegaZone, the umbrella organization of MegaZone Cloud. This transaction is a component of Binance’s plan to revamp its governance structure and adhere to regulatory standards.

Binance Plans To Sell GOPAX Shares

As a researcher studying the cryptocurrency exchange market, I can share that Binance, one of the leading players in this space, is currently in discussions to sell off its GOPAX shares to MegaZone. This move is expected to decrease Binance’s ownership stake to approximately 10%. The primary reason behind this decision stems from the Financial Services Commission’s mandate for Binance to identify a new largest shareholder and enhance overall governance structures.

Last year’s acquisition of a 72.26% stake in GOPAX by the crypto exchange encountered hold-ups in approval from financial regulators, leading us to adopt this tactic. A market source explained, “Binance is pursuing the transaction to enhance its administrative framework in response to regulatory demands for submitting a modification report prior to the renewal of its real-name account agreement with Jeonbuk Bank in August.” (Note: This version maintains the first-person perspective and provides a clearer explanation of Binance’s motivation behind the move.)

Over the past year, financial regulators have yet to make a decision on Streami’s report, causing a delay. In response, BF Labs, a local KOSDAQ-listed firm and now the second-largest shareholder in Streami (operator of GOPAX), initiated this sale to expedite regulatory approval.

Despite their efforts to expand their ownership, MegaZone’s plans were hindered by financial constraints, resulting in an unsuccessful bid for more shares. Meanwhile, MegaZone has emerged as a significant contender in addressing its regulatory hurdles.

What’s Next?

Maintaining the status of Binance and GOPAX as reputable exchanges relies heavily on the continuous sale of GOPAX shares. However, there’s a pressing need for both parties to renew their real-name account contract with Jeonbuk Bank, which falls due on August 11. This necessitates significant changes in GOPAX’s governance structure and obtaining approval from financial authorities. The dire financial situation of GOPAX, with complete erosion of capital, adds a sense of urgency to this situation.

During the past year, GOPAX had reached an arrangement with the crypto exchange for repaying its 56 billion won debt, which arose due to FTX’s bankruptcy in 2022, under the provision that regulatory approval be granted for their entry. Nevertheless, the regulatory bodies have yet to approve the report, leading to a delay in the transfer of funds.

Due to the surge in Bitcoin prices, GOPAX’s debt has more than doubled, reaching approximately 118.4 billion won by April this year. Additionally, a representative from MegaZone mentioned in the report that:

As a researcher exploring different types of collaborations, I’m considering equity acquisition as one potential option, but I want to clarify that this approach is contingent upon obtaining necessary government approvals.

The talks are still in progress, and the details regarding the procedure and schedule are yet to be determined. In the interim, this transaction signifies a substantial step for Binance as it maneuvers through regulatory frameworks and strengthens its presence in the South Korean business scene.

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2024-07-11 15:02