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.
— Coingraph | News (@CoingraphNews) June 7, 2023
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.
This article was written by Damian Chmiel at www.financemagnates.com.
