Gopax, Supported by Binance, Reduces Losses Amidst Robust Cryptocurrency Trading Activity

Gopax, one of the quintet of fully regulated cryptocurrency trading platforms in Seoul, South Korea, has observed a downturn in net losses, coming in at 51.3 billion Korean won (equivalent to $37 million) for the year 2023, a noticeable decrease from the preceding year’s 90.6 billion won.

The platform experienced a remarkable surge in revenue, boasting an increase of 97%, and reaching the mark of 3.1 billion won. Equally, its net operating loss was condensed by 78%, approximating 17 billion won. The enhancement of Gopax’s economic status can be ascribed to a positive market sentiment within the South Korean cryptocurrency landscape, which is notable for its high level of activity. Additionally, as per a report by Bloomberg in November 2023, the South Korean won has surpassed the U.S. dollar in the ranks as the principal fiat currency utilized in cryptocurrency transactions.

Nevertheless, Gopax’s financial condition has been affected due to its association with Genesis Global Capital. Genesis managed the crypto custody service GoFi for Gopax and had to pause withdrawals in November 2022 amidst a liquidity shortfall that was sparked by the downfall of FTX.

This complication led to Gopax owing its clientele close to 63.7 billion won. Binance’s involvement in February 2023, with a substantial investment acquiring a 72.26% shareholding in the exchange, was instrumental in mitigating these liquidity issues. Yet, this transition has been met with regulatory hiccups in South Korea, owing chiefly to Binance’s legal entanglements in the United States.

Binance’s Director of Business Development for Asia-Pacific, Steve Kim, has indicated during a roundtable discussion in February, that Binance is contemplating downsizing its ownership to become a minority investor to ease the financial and regulatory strain on Gopax. Furthermore, Binance CEO Richard Teng made a trip to Seoul in March to liaise with financial oversight bodies, an event that was covered by domestic news outlets.

In a disclosure made in December, GOPAX communicated advancements made towards garnering capital to rejuvenate their business operations and to reimburse the lost deposits of their clients. The updated strategy was anticipated to bolster GOPAX’s prospects of renewing its license with the Financial Services Commission (FSC) in South Korea. That said, for over a year the FSC has deferred approving the modifications to GOPAX’s registration, a predicament stemming from the regulatory challenges faced by Binance in the US.

The financial authorities in South Korea have enforced stringent new mandates upon cryptocurrency enterprises to curb the hazards of laundering illicit funds and manipulating the market, regulations that were fully enacted last year.