A South Korean news outlet stated on August 7 that the crypto exchange GOPAX would be stripped of its ability to provide fiat-coin pairings. An article in the Chungnyun Ilbo states that the “contract renewal” between GOPAX and Jeonbuk Bank is being “reviewed.” GOPAX has “been in a state of capital erosion for several years,” the source stated.
GOPAX Crypto-Fiat Trading Future in Doubt?
After Binance’s failed takeover effort, the exchange’s financial situation deteriorated even further. In February 2023, Binance acquired 72% of GOPAX. There was hope that this arrangement would change the face of cryptocurrency in South Korea. However, as regulators stepped in, Binance abandoned its plans to enter the South Korean market.
Rumours circulated last month that Binance was allegedly in talks to sell most of its GOPAX holdings to Megazone, a cloud business based in South Korea. However, authorities seem to be sceptical about the sale’s feasibility, so it has not yet taken place. This fact seems to be causing concern for Jeonbuk Bank.
With GOPAX, the bank has formed a “real-name” account partnership. Under South Korean legislation, only transactions involving these partnerships are eligible for trade fiat.
Big Four to Return to the Fore of South Korean Crypto?
Without a banking connection, Crypto Exchange GOPAX might be forced to limit its services to trading cryptocurrencies solely. Many in South Korea considered Jeonbuk Bank’s entrance into the cryptocurrency market in February 2022 a turning point for the industry.
Upbit, Bithumb, Coinone, and Korbit are the so-called “big four” exchanges that control the industry at the moment. Upbit has captured 60–80% of the market, with Bithumb making up the rest.
Before the agreement with Jeonbuk Bank, only the “big four” banks were allowed to provide fiat trading pairs. GOPAX’s possible withdrawal from the industry would reassert the group’s dominance in the South Korean crypto market, which is experiencing large demand volumes.
Reportedly, Jeonbuk Bank has stated that it will wait for the financial authorities to “make a final decision” regarding the Megazone takeover deal before deciding whether or not to extend its GOPAX deal.
Temporary Reprieve in the Cards?
The bank has said it is contemplating a short-term “conditional contract,” as its current GOPAX agreement is scheduled to terminate on August 11. GOPAX’s “capital erosion” began in 2022, when the company was compelled to cease its GoPay crypto management service.
According to the news source, the exchange’s debt has ballooned to “exceeding 110 billion won ($80 million)” since GoPay’s collapse. The media outlet speculated that GOPAX’s fortunes might swiftly turn around if the Megazone transaction continues. Under the terms of the deal, Binance would divest itself of less than 10% of the exchange operator.
Megazone reportedly “has a strong desire to acquire GOPAX” as well. The cloud provider has submitted a legally enforceable investment commitment letter to the Financial Services Commission. By reaching this agreement, GOPAX could “pay most of its debt” to “individual investors.”
Furthermore, the “obstacles” that have been hindering the firm’s ability to reach “financial soundness” “are expected to disappear” once negotiations with Jeonbuk Bank resume.
Buyer Also Facing Debt Issues?
Nevertheless, according to the media outlet, insiders believe the sale is unlikely. The insiders noted that Megazone’s debt ratio is “over 1,100%.” The bank stated that it would decide whether to extend the real-name account after the Financial Services Commission had decided. A Gopax official denied involvement with the contract renewal and promised to improve transaction indicators and other factors to lower the annual debt and demonstrate GOPAX’s worthiness as an investment.
