![Binance in Final Talks to Sell Majority Stake in Gopax to South Korean Cloud Service Provider Megazone Binance in Final Talks to Sell Majority Stake in Gopax to South Korean Cloud Service Provider Megazone](https://charltonsquantum.com/wp-content/uploads/2024/07/binance-in-final-talks-to-sell-majority-stake-in-gopax-to-south-korean-cloud-service-provider-megazone.png)
On 11 July, 2024, reports emerged that Binance is in the final stages of negotiations to sell a majority stake in South Korean crypto exchange Gopax to local cloud service provider Megazone. The move aims to reduce Binance’s 72.6% ownership in Gopax to around 10%, following requests from South Korean financial authorities to improve the exchange’s governance structure.
Binance’s decision to offload the majority of its stake comes as Gopax faces an August 11 deadline to renew its real-name account contract with Jeonbuk Bank, initially signed in August 2022 for a two-year term. Binance had acquired its controlling stake in Gopax in February 2023 as part of efforts to re-enter the South Korean market after ceasing multiple operations there in 2021. However, South Korean regulators have so far denied approval for the change in majority ownership, blocking Binance’s capital injection into Gopax.
An unnamed industry insider told The Chosun Ilbo that Binance is pursuing the stake sale to meet regulatory requirements for governance improvements ahead of Gopax’s real-name account renewal. The source indicated a deal could be finalized this month.
Gopax has been in a precarious financial position, with total liabilities of 118.4 billion won ($91.5 million) as of April 2024. This includes 63.7 billion won in unpaid debts to users of its GOFI product and a 36.4 billion won loan from Binance intended to help repay those users. Securing the real-name account renewal is critical for Gopax to maintain its status as a won-based cryptocurrency exchange in South Korea. If approved, the stake sale to Megazone could pave the way for new capital investment and regulatory approval needed to shore up Gopax’s finances and operations.
The regulatory hurdles have prompted Binance to adjust its ownership in Gopax. This move is seen as a strategic response to enhance its governance structure as required by local authorities. The sale could enable Gopax to stabilize its financial situation and ensure compliance with South Korean regulations, thus maintaining its operational viability.
Despite facing significant regulatory challenges, Binance remains the world’s largest cryptocurrency exchange, boasting over 200 million users and managing assets totaling $100 billion. Binance has demonstrated remarkable growth, adding 40 million users in 2023 and at least 30 million more in the first half of 2024. The exchange has also secured regulatory approvals in various regions, including registration with India’s Financial Intelligence Unit and a license from Dubai’s VARA.
However, Binance has not been without controversies. Last year, the Commodity Futures Trading Commission (CFTC) filed charges against Binance for allegedly operating an illegal digital asset derivatives exchange and evading federal laws. Similarly, the US Securities and Exchange Commission charged Binance Holdings LTD and ex-CEO Changpeng Zhao with operating unregistered exchanges and offering unregistered securities.
The potential sale of Gopax to Megazone represents a significant shift in Binance’s strategy to align with regulatory demands while maintaining its global dominance. This move could also set a precedent for other cryptocurrency exchanges navigating complex regulatory landscapes worldwide.