SEC lawsuit against Binance stalls Gopax acquisition deal in South Korea

The United States Securities and Exchange Commission’s (SEC) lawsuit against Binance could damage the crypto exchange’s business opportunities in South Korea.

A report published in a South Korean daily suggests that the Financial Service Committee (FSC) — the country’s financial watchdog — is reviewing Binance’s acquisition of local crypto trading platform Gopax. Binance acquired a majority stake in Gopax in February, intending to reenter the South Korean crypto market after a two-year hiatus.

The FSC has reportedly suspended Gopax’s executive change report filed on March 7, citing the recent SEC lawsuit. The report detailed the nomination of three Binance members as inside directors of Gopax, including Leon Singh Poong, the CEO of Binance Asia Pacific.

In its review of the Gopax deal, the FSC claimed it was very difficult to accept the acquisition request at this point, given the alleged accusations of securities law violations and further requests from the SEC to freeze Binance.US assets. One of the executives from FSC said that it is important to consider the SEC’s lawsuit, adding:

“It is cautious to say that the report is being reviewed internally,”

Binance’s acquisition of Gopax was not just about the crypto exchange’s reentry into South Korea but also a revival of the troubled local crypto trading platform. In November 2022, Gopax halted withdrawals of principal and interest payments from its decentralized finance service GoFi after the collapse of the FTX crypto exchange and bankruptcy of digital assets financial services firm Genesis.

Genesis’ parent company, the Digital Currency Group, was reportedly Gopax’s second-largest shareholder and a key business partner providing its GoFi product. The acquisition deal by Binance promised to funnel new capital into the Gopax exchange for customer withdrawals and interest payments for GoFi.

The SEC lawsuit against Binance accused the crypto exchange of commingling customers’ funds and violating various securities laws. The SEC has filed 13 charges against the exchange, its subsidiaries and its CEO, Changpeng Zhao.

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