Binance buys majority stake in Korean crypto exchange GOPAX • TechCrunch

Binance Holdings plans to return to South Korea after pulling out of the market in 2021. The world’s largest cryptocurrency trading platform by volume said it had acquired a majority stake in South Korea-based crypto exchange GOPAX.

In November, GOPAX suspended customer withdrawals from its DeFi service, GoFi, after suffering effects from the bankrupt lender Genesis Global Trading, a subsidiary of Digital Currency Group (DCG). Genesis offered returns on crypto lending to GOPAX, and DCG, which invested in GOPAX in April 2021, is the second largest shareholder in GOPAX. In addition, GOPAX’s parent company, Streami, is one of the 10 largest creditors of Genesis.

The new capital from Binance will enable GOPAX customers to make withdrawals and interest payments to normalize the Korean crypto trading platform. GOPAX had more than 600,000 users as of March 2021, per its website. A spokesperson for Binance told TechCrunch that Binance also plans to offer Binance Academy, a blockchain and cryptocurrency education platform, to GOPAX users to improve blockchain, cryptocurrency and web3 awareness.

Binance says the capital came from Industry Recovery Initiative (IRI), a Binance-led co-investment project. Binance has set up IRI to protect users in the web3 industry and has committed $1 billion to the IRI project. Other firms in the web3 industry participated in the IRI project, including Jump Crypto, Polygon Ventures, Aptos Labs, and Animoca Brands.

“The Industry Recovery Initiative (IRI) was created to support promising companies that were adversely affected by the events of last year,” Changpeng “CZ” Zhao, founder and CEO of Binance, said in his statement. “We hope that taking this step with GOPAX will further rebuild the Korean crypto and blockchain industry.”

Binance did not disclose the stake size or valuation of the acquisition. Still, according to a local media outlet in January, Binance was in advanced talks to buy a 41.2% stake in GOPAX from the company’s largest shareholder, GOPAX CEO Junhaeng Lee.

GOPAX is one of the five cryptocurrency exchanges (Upbit, Bithumb, Coinone, Korbit and GOPAX) in South Korea. Upbit has the largest market share, with 76.6% measured in traded value in 2021, followed by Bithumb and Coinone with 18.5% and 4.5%, respectively, per crypto analytics firm Xangle’s report.

The latest acquisition comes nearly two months after Binance bought Sakura Exchange BitCoin (SEBC) in Japan for an undisclosed amount as Binance eyes an expanded footprint in the East Asian market once again.

Binance re-entered Japan last year via the SEBC acquisition, two years after it stopped service in the Japanese market. Japan’s Financial Services Agency (FSA) issued warnings to Binance, which operated without proper registration and licensing, in 2018 and 2021. Binance said it “secured its first license in East Asia by acquiring SEBC.”

Binance also said in its statement that it “is committed to working with South Korean regulators and virtual asset stakeholders to explore how Binance can leverage its technology and liquidity to support the local ecosystem.” The Binance spokesperson did not provide further details on the ongoing talks regarding licenses and registration in South Korea.

South Korea works to regulate the crypto sector to protect investors in the wake of a series of bankruptcies and allegations of fraud in the global web3 space last year; earlier this year, Japan also called other countries to regulate crypto as strictly as banks.

Binance has obtained regulatory approvals or authorizations in many countries, including Japan, France, Italy, Spain, Bahrain, Abu Dhabi, Dubai, New Zealand and more.

GOPAX did not respond to TechCrunch’s request for further comment.

(Updates with commentary from Binance in the third and tenth paragraphs.)