Binance Offloads Gopax’s Genesis Asset Rights at Major Discount, Incurring Substantial Losses for BNB Holders

• Binance, the largest shareholder of the South Korean cryptocurrency exchange Gopax, sold the asset claims of Gopax victims at less than half their face value on May 27.
• The discounted sale has led to substantial financial losses for investors, contradicting Binance’s earlier promise to fully compensate victims of the virtual asset deposit service ‘GoFi.’
• “Binance initially promised to cover the Gopax victims’ funds with its Industrial Recovery Fund (IRI), but IRI was only used to pay the first damage (about 15 billion won),” an anonymous source disclosed.

Discover the latest developments in Binance’s controversial sale of Gopax’s Genesis asset rights, leading to significant financial losses for investors.

Initial Promises and Unexpected Actions Concerning Gopax Victims Asset Claims

When Binance acquired a majority stake in Gopax, it committed to compensating investors for the approximately KRW 70 billion (around $52 million) lost due to suspending fund withdrawals in the ‘GoFi’ service. Instead of using its funds to cover these losses, Binance sold the victims’ asset claims at extremely discounted rates.

Investor Discontent and Regulatory Scrutiny

Notably, Genesis, the virtual asset deposit service associated with Gopax, had its bankruptcy compensation plan approved by a U.S. court last week. Genesis has committed to returning 77% of the approximately $3 billion in bond funds to creditors.

In contrast, Gemini, another cryptocurrency exchange with funds tied up in Genesis, announced plans to compensate 97% of its affected customers using bankruptcy compensation. Gopax, however, has not made any official statements regarding its compensation plans or the sale of Genesis asset claims.

In a similar case involving the bankrupted FTX exchange, Sunil Kavuri, a leading creditor in the FTX creditor community, criticized the sale of assets at discounted prices, arguing that these assets should have been returned to investors. Kavuri stated, “Sullivan & Cromwell has trampled over our property rights,” Kavuri said. “They have liquidated billions of dollars of crypto assets. There’s a token S&C sold at 11 cents; it’s now trading at two dollars. FTX had $10 billion in Solana tokens — they sold it at a 70% discount.”

Gopax’s board of directors, which includes Binance representatives, has been accused of withholding information regarding the source of funds used to compensate the second batch of victims last August. The secrecy and the 50% discount at which the Genesis claims were sold have fueled investor frustration and distrust.

The Financial Services Commission (FSC) of South Korea is reviewing Gopax’s executive change report, including appointing Binance personnel as directors. The FSC has also requested additional information from Binance regarding the allegations of money laundering and other concerns.

Conclusion

The sale of Gopax’s Genesis asset rights by Binance at a steep discount has led to significant financial losses for investors, raising questions about Binance’s commitment to its promises. The ongoing regulatory scrutiny and investor discontent highlight the need for greater transparency and accountability in the cryptocurrency industry. As the situation unfolds, stakeholders will be closely watching how Binance and Gopax address these concerns and what measures will be taken to restore investor trust.