Binance’s Acquisition of Gopax under Threat amid Ongoing SEC Battle

The Financial Services Commission (FSC) of South Korea has decided to track the ongoing legal action against Binance closely. According to the local magazine NewsPim, it may cause a delay in the approval of the cryptocurrency exchange's acquisition of Gopax, a prominent South Korean trading platform. Previously, the FSC had postponed this approval in April due to an investigation into potential money laundering activities involving Binance.

SEC Lawsuit Stalls South Korean Acquisition Deal

The present situation has become more complicated as the US Securities and Exchange Commission (SEC) has initiated legal proceedings against Binance and its CEO, Changpeng Zhao, on charges of violating securities laws. Furthermore, the SEC has applied for the seizure of assets, raising doubts over the completion of the acquisition.

According to recent reports from this week, the SEC filed a lawsuit on 5 June against Binance. The crypto exchange and its CEO were accused of misappropriating customer assets. The charges assert that Binance inflated crypto trading volumes and secretly transferred customer assets to a different crypto-related firm to invest in currencies traded on its own platform.

In addition to the SEC, Binance has faced legal challenges from other US regulatory bodies. In March, the US Commodity Futures Trading Commission (CFTC) sued Binance for evading registration obligations and breaching rules related to trading and derivatives.

Moreover, the company is under investigation by US prosecutors and the US Internal Revenue Service (IRS) for possible violations of anti-money laundering laws. On top of that, the SEC is trying to prove that the crypto exchange has been supporting unregistered securities trading.

JUST IN: 🇰🇷 South Korean financial authorities say they are monitoring the progress of the SEC lawsuit against Binance, Binance's acquisition of control in the Gopax exchange may be canceled.

Gopax Deal under Threat

Given these developments, South Korea's financial authorities have already halted the acceptance of the business change report submitted by Gopax on 7 March. This report contained information on the proposed appointment of three Binance members, including the CEO of Binance Asia Pacific, Leon Singh Poong, as inside directors of Gopax. Given the various legal challenges, the report is unlikely to be approved soon.

"It is cautious to say that the report is being reviewed internally. It is necessary to look at the SEC trend," the FSC official said in a statement quoted by NewsPim in Korean and then translated to English.

According to the FSC's official statement, a conclusion should be reached within 45 days of receiving such a report. However, additional time may be needed for data reinforcement. Therefore, a delay is expected in the approval of the Gopax operator change report.

Binance Ireland Will Help?

If Binance's acquisition of Gopax is prohibited, it could disrupt the withdrawal of GoFi deposit assets, a product that accrues interest when virtual assets are entrusted to GoPax. This is because Binance had pledged to fully repay the principal sum and interest of Gopax upon signing the acquisition contract. Notably, about 75% of the funds, approximately 56.6 billion won, are yet to be repaid.

Despite concerns over the seizure of Binance assets, Gopax officials believe that there will be no interruption in GoFi repayment. They state that Binance has several bases, and funds for GoFi redemption are reportedly coming from holdings based in Ireland.