Binance closer to South Korea re-entry as FIU reopens Gopax acquisition review: report

South Korean authorities have resumed their review of Binance's acquisition of local crypto exchange Gopax after a delay of over two years, local news agency Newsis reported Tuesday.

This indicates that Binance, the world's largest crypto exchange, could soon re-enter the South Korean market, after initially shutting down local operations in 2021.

According to Newsis, South Korea's Financial Intelligence Unit (FIU) is currently assessing the formal report from Gopax on changing its key executives and is reviewing it favorably, with approval of the Binance-Gopax change expected as early as the end of 2025.

Under the current South Korean legal framework, there is no distinct suitability review for major shareholders of crypto exchanges. Consequently, this executive change report is viewed as essentially a review of Binance’s major shareholder qualification.

Binance and Gopax first submitted the executive change report in March 2023, after Binance became the largest shareholder of Gopax by acquiring 67% of its shares. Local authorities stalled the approval process since then, citing potential anti-money laundering risks.

In June 2023, the U.S. Securities and Exchange Commission sued Binance for illegally offering services in the U.S., while the Department of Justice accused the exchange of money laundering violations, resulting in the exchange paying $4.3 billion in penalties.

FIU's latest move appears to be influenced by the resolution of those compliance issues in the U.S., Newsis noted.

The Block has reached out to the FIU and Binance for comment.

What is Gopax?

Gopax is one of the five South Korean cryptocurrency exchanges authorized to handle cash-to-crypto transactions, a privilege granted only to platforms that meet rigorous know-your-customer and AML requirements.

Gopax faced a serious withdrawal crisis in 2023 when its DeFi partner, Genesis Global Capital (GGC), froze customer funds tied to Gopax's GoFi deposit product. 

This issue was triggered by GGC halting withdrawals and subsequently filing for Chapter 11 bankruptcy in January 2023 following the collapse of FTX. This resulted in an estimated $47 million (around 56.6 billion Korean won) in GoFi customer funds being frozen. 

The crisis directly led Binance to step in, acquiring a majority stake in Gopax in February 2023 with the stated intention of injecting capital to help repay the affected GoFi users.

As the takeover process stalled, Binance sought to sell a large portion of its Gopax shares to local cloud service provider Megazone, in an aim to become the second-largest shareholder. However, that deal fell through as of late 2024, according to local news outlet The Bell, indicating that Binance remains Gopax's largest shareholder.