Binance, the world’s largest crypto exchange by trading volume, has entered into final negotiations with South Korean cloud services provider Megazone to sell most of its shares in Gopax.
If the deal goes through, Binance will cut its stake in Gopax, one of South Korea’s five fully licensed crypto exchanges, to around 10%, according to a translated local media report.
Gopax was acquired by Binance in February 2023 after the exchange faced liquidity issues associated with the FTX-afflicted Genesis Global Capital. Binance stepped in to resolve Gopax’s liquidity issues under the condition of acquiring a 72.26% stake in the platform. Binance remains the largest shareholder in Gopax with a 67.45% stake, according to its latest financial report.
Following the Binance acquisition, Gopax filed a major shareholder change report for its virtual asset service provider registration with South Korea’s Financial Services Commission (FSC). However, local financial authorities have repeatedly delayed approving the transfer of ownership to Binance since, reportedly due to concerns surrounding its legal issues in the U.S.
The FSC requested Binance to reduce its holding to less than 10% for the request to be accepted, ChosunBiz reported on Wednesday. Binance first indicated it was looking to reduce its stake in the South Korean crypto exchange in January.
"Binance is pushing for a share sale to meet the financial authority's demand for improved governance ahead of the real-name account renewal with Jeonbuk Bank in August," a source familiar with the matter told ChosunBiz, adding that a conclusion to negotiations is expected this month.
Domestic KOSDAQ-listed company BF Labs previously emerged as a potential buyer of Gopax, ChosunBiz reported, acquiring an 8.55% stake in its parent company Streamy in September 2023, becoming the second-largest shareholder and appointing its CEO as Gopax's CEO. However, BF Labs' further acquisition plans fell through.
"We are discussing various collaboration methods, including a share acquisition, pending government approval," a Megazone spokesperson told ChosunBiz, noting that no specific process or timeline has been decided.
In April, Gopax reported its revenue grew 97% year-over-year amid recovering market sentiment. However, it still incurred a net loss of 51.3 billion Korean won ($37 million) in 2023 stemming from debt linked to deposits stuck in Genesis Global Capital.
Binance, Gopax and Megazone did not immediately return a request for comment from The Block.
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