The United States Securities and Exchange Commission’s (SEC) lawsuit against Binance could potentially affect the crypto exchange’s business opportunities in South Korea. A South Korean daily report suggests that the Financial Service Committee (FSC), the country’s financial watchdog, is currently reviewing Binance’s acquisition of the local crypto trading platform Gopax.
Binance acquired a majority stake in Gopax in February this year, intending to re-enter the South Korean crypto market after two years. However, 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 the CEO of Binance Asia Pacific.
The FSC claims that it is challenging to accept the acquisition request at this point, given the alleged accusations of securities law violations and further requests by the SEC to freeze Binance.US assets. However, it is vital to consider the SEC lawsuit, with one FSC executive stating, “It is cautious to say that the report is being reviewed internally.”
Binance’s Gopax acquisition was not only about the crypto exchange’s re-entry into South Korea but also a revival of the troubled local crypto trading platform. Gopax halted withdrawals of principal and interest payments from its decentralized finance (DeFi) service GoFi in November 2022, following the collapse of the FTX crypto exchange and bankruptcy of Genesis Global Capital.
Genesis’ parent company Digital Currency Group was Gopax’s second-largest shareholder and a key business partner, providing its GoFi product. Binance’s acquisition deal promised to infuse new capital into the Gopax exchange for customer withdrawals and interest payments for GoFi.
The SEC lawsuit against Binance accuses the crypto exchange of co-mingling customers’ funds and violating various securities laws. The SEC has filed 13 charges against the exchange and its CEO Changpeng Zhao.
While Binance’s supporters argue that the acquisition could provide much-needed support and recovery for Gopax, critics claim that the pending SEC lawsuit could affect the deal negatively, leaving Gopax in a precarious position. The outcome of the SEC lawsuit could have far-reaching implications on Binance’s global operations and influence regulators worldwide, including South Korea. Only time will tell if the deal will proceed and whether both companies will ultimately benefit from it.
Source: Cointelegraph
