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South Korean Crypto Exchange GOPAX at Risk of Losing Won Trading Rights amid Financial Crisis
GOPAX, a crypto exchange company in South Korea, may lose its right to trade Korean won due to its ongoing financial challenges. It was revealed that Jeonbuk Bank is currently reviewing its “conditional contract” with GOPAX.
Jeonbuk Bank has said it will extend its contract agreement with GOPAX only when the financial authorities make a final decision on the Megazone acquisition deal. But for the moment, it will only consider a conditional contract, with its existing contract set to expire on August 11.
An official from Jeonbuk Bank stated:
“We are reviewing a ‘conditional contract’ with Gopax. As Megazone has submitted a letter of commitment (LOC) for investment in Gopax to the Financial Services Commission, the decision on whether to extend the real-name account will be made after the Financial Services Commission makes its decision.”
Megazone Acquisition Deal: Hope amidst Financial Issue
GOPAX’s financial troubles stem from the suspension of its virtual asset management service GoPay in 2022. This caused the exchange to take on a lot of debt. Its current debt is considered more than 110 billion won ($80 million), much more than its total assets of 17.2 billion won at the end of last year.
GOPAX’s largest shareholder, Binance, is seeking ways to address the financial challenges. The exchange is in negotiations to sell the majority of its stake to software company Megazone, which has expressed interest in taking charge of GOPAX and has even submitted a legally binding investment commitment letter to the Financial Services Commission.
Should Megazone successfully acquire Binance’s stake, GOPAX can settle its debt and even continue its contract with Jeonbuk Bank.
While this may look direct, it was revealed that the stake sale is unlikely to be successful. This is because Megazone is having its own financial challenges. The software company incurred a debt ratio of over 1,100% as of the end of 2023. Also, it has been having an increasing deficit, with a loss of 47.9 billion won in 2022 and a deficit of 90.8 billion won in 2023.
Regulatory Challenges: The Importance of Real-Name Accounts in South Korean Crypto Trading
Based on predictions in the South Korean crypto industry, Megazone may be unable to extend its real-name account contract with Jeonbuk Bank if it fails to acquire GOPAX, which could be a setback for the company.
According to South Korean law, only exchanges with these real-name partnerships have the legal right to operate the won exchange trading. Thus, GOPAX will be limited to crypto-to-crypto trading, which could worsen its financial situation.
Despite being in the heat of financial challenges, GOPAX has expressed a commitment to improve its transaction indicators and work on reducing its debt to prove to investors that they are worth investing in.
“We have nothing to say regarding the renewal of the contract,” a GOPAX official said and added, “We will improve transaction indicators and other factors to reduce the annual debt size and show that Gopax is a company worth investing in.”
South Korean Crypto Exchange GOPAX at Risk of Losing Won Trading Rights amid Financial Crisis
