Binance is considering the possibility of reducing the shares of the South Korean exchange Gopax amid liquidity concerns

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In a strategic move, Binance, the global cryptocurrency exchange giant, is considering the possibility of reducing its stake in the South Korean platform Gopax. 

The move aims to address liquidity issues and overcome compliance obstacles, showcasing Binance’s proactive approach to improving stability within its exchange portfolio.

Binance is considering the possibility of reducing Gopax exchange fees to address liquidity and compliance issues

This decision comes in the wake of concerns arising from the collapse of FTX and local regulatory hurdles, indicating a proactive effort by Binance to address issues within its exchange portfolio.

Gopax, an important South Korean cryptocurrency exchange and one of the five fully registered exchanges in the country, had to face liquidity problems related to the failure of FTX, Genesis Global Capital.

Binance intervened to save Gopax from liquidity problems in February 2023, acquiring a substantial stake of 72.26% in the exchange.

According to recent reports from the local press organ Dailian, Binance is currently engaged in an initial phase of discussion to reduce its stake in Gopax. 

The move is aimed at resolving the liquidity issues that emerged after the collapse of FTX and addressing local compliance issues. Gopax’s liquidity problems have prompted Binance to review its proprietary structure, highlighting the need for a strategic change.

Binance’s plan and Gopax’s efforts

According to Binance’s Director for Asia-Pacific, Steve Kim, the exchange is considering converting the loans granted to Gopax into shares. Subsequently, Binance intends to sell these shares to other companies. 

This strategic move should lighten Gopax’s debt burden and provide the exchange with a fresh injection of funds from new investors. 

As a result, Binance would go from being the main shareholder to the second, signaling a significant change in ownership dynamics.

Gopax had previously announced in December that it was in the final stages of raising funds to normalize the deposits lost during the Genesis Global Capital incident. 

The revised plan, which includes the reduction of Binance’s participation, is expected to play a crucial role in helping Gopax renew its registration with the local regulatory authority, the Financial Services Commission (FSC). 

Despite the acquisition by Binance, Gopax has faced delays in receiving regulatory approval due to Binance’s legal issues in the United States.

According to reports, the FSC has delayed the approval of Gopax’s registration modification for over a year, due to concerns related to Binance’s legal issues in the United States. 

Binance’s plan to reduce its stake could potentially address these concerns and pave the way for Gopax to more easily overcome regulatory obstacles.

Steve Kim from Binance stated that further details about the plan will be provided in the next two months. 

As the cryptocurrency sector continues to evolve, Binance’s strategic decision regarding its participation in Gopax highlights the dynamic nature of the market and the importance of proactive measures to ensure the stability and compliance of cryptocurrency exchanges.

Conclusions

Binance’s decision to reduce its stake in Gopax reflects the exchange’s commitment to addressing liquidity challenges and regulatory concerns within its portfolio. 

While the cryptocurrency landscape is subject to regulatory scrutiny and market changes, Binance’s strategic moves highlight the need to adapt and make proactive decisions to support the health and stability of cryptocurrency exchanges.