The lawsuit filed by the United States Securities and Exchange Commission (SEC) against Binance could have repercussions for the crypto exchange’s business prospects in South Korea. According to a report in a South Korean publication, the country’s financial watchdog, the Financial Service Committee (FSC), is reviewing Binance’s acquisition of local crypto trading platform Gopax.
Binance had acquired a majority stake in Gopax in February as part of its plan to reenter the South Korean crypto market after a two-year absence.
The FSC has reportedly suspended Gopax’s executive change report, which was filed on March 7, citing the recent SEC lawsuit. The report outlined the appointment of three Binance members, including Leon Singh Poong, the CEO of Binance Asia Pacific, as inside directors of Gopax.
In reviewing the Gopax deal, the FSC expressed difficulty in accepting the acquisition request at this point, considering the allegations of securities law violations against Binance and the SEC’s requests to freeze Binance.US assets. An executive from the FSC mentioned that it is important to take the SEC’s lawsuit into consideration, indicating that the report is being internally reviewed with caution.
Binance’s acquisition of Gopax not only aimed to facilitate its reentry into the South Korean market but also intended to revive the struggling local crypto trading platform.
Gopax had experienced difficulties, including the suspension of withdrawals from its decentralized finance service GoFi after the collapse of the FTX crypto exchange and the bankruptcy of Genesis, a digital assets financial services firm. Genesis’ parent company, the Digital Currency Group, was reportedly Gopax’s second-largest shareholder and a key partner providing the GoFi product. Binance’s acquisition deal was expected to inject new capital into Gopax to facilitate customer withdrawals and interest payments for GoFi.
The SEC’s lawsuit against Binance alleges the commingling of customers’ funds and violations of various securities laws. The lawsuit includes 13 charges against Binance, its subsidiaries, and its CEO, Changpeng Zhao.
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