- Binance faces increasing scrutiny and regulatory examination in South Korea over allegations of selling Gopax users’ claims at a low price, contrary to previous full compensation promises.
- The controversy stems from Gopax’s financial crisis last year, where the crypto custody service GoFi halted withdrawals, causing investors significant losses.
- Anonymous sources claim Binance used proceeds from discounted asset sales only to cover the first round of investor compensation, leaving a substantial portion of the debt unresolved.
Binance under fire for handling Gopax users’ claims, raising questions about transparency and investor trust.
Binance Faces Allegations Over Gopax Users’ Claims
The controversy surrounding Binance’s handling of Gopax users’ claims has intensified, following Gopax’s financial turmoil last year. The crypto custody service GoFi, part of Gopax, suspended withdrawals, resulting in approximately 70 billion won (51.5 million USD) in losses for investors. Binance, which acquired a significant stake in Gopax, had pledged to compensate for these losses. However, allegations have surfaced that Binance sold the affected users’ claims linked to Genesis Global Capital for less than half their nominal value, just before a significant rise in cryptocurrency prices, exacerbating the financial losses for Gopax investors. The unpaid GoFi debt has now exceeded 100 billion won (~73.6 million USD).
U.S. Court Approves Genesis Bankruptcy Compensation Plan
In a related development, a U.S. court recently approved Genesis’s bankruptcy compensation plan. Genesis, which provided virtual asset deposit services connected to Gopax, committed to returning approximately 77% of the bond funds, totaling around 3 billion USD, to creditors. In contrast, Gemini, another crypto exchange affected by Genesis’s issues, plans to repay 97% of its impacted customers using similar compensation funds.
Investor Discontent and Lack of Transparency
Binance’s approach to handling the claims has not only led to financial losses but also increased distrust among Gopax investors. The company’s board, including Binance representatives, has been accused of lacking transparency regarding the sources of funds used for investor compensation. This secrecy, combined with the 50% discount on the sold Genesis claims, has intensified investor frustration. Notably, critics like Sunil Kavuri, a prominent member of the FTX creditor community, have condemned the practice of selling assets at discounted rates, which significantly undervalued the current market prices.
Conclusion
The allegations against Binance regarding the handling of Gopax users’ claims have sparked significant controversy and scrutiny. The lack of transparency and the decision to sell claims at a discount have led to increased financial losses and distrust among investors. As the situation unfolds, it remains to be seen how Binance and Gopax will address these concerns and whether further regulatory actions will be taken.
