The recent events surrounding Binance, the largest shareholder of the South Korean cryptocurrency exchange Gopax, have led to substantial financial losses for investors. Despite Binance’s initial promise to fully compensate victims of the virtual asset deposit service ‘GoFi,’ the asset claims of Gopax victims were sold at less than half their face value on May 27. This discounted sale occurred amid rising cryptocurrency prices, exacerbating the losses for Gopax’s creditors.
When Binance acquired a majority stake in Gopax, it committed to compensating investors for the approximately KRW 70 billion lost due to suspending fund withdrawals in the ‘GoFi’ service. However, instead of using its funds to cover these losses, Binance sold the victims’ asset claims at extremely discounted rates. This has raised questions about Binance’s true intentions and its commitment to its promises.
Following the sale of the asset claims, the price of major cryptocurrencies, including Bitcoin, surged, further widening the financial gap for Gopax’s creditors. The debt to GoFi has now increased to an estimated KRW 100 billion, excluding existing repayments. This situation has created a challenging financial landscape for investors who were relying on Binance’s support.
One of the major criticisms levied against Binance is the lack of transparency in its actions. An anonymous source familiar with the transaction revealed that Binance offloaded the claims as part of its strategy to manage Gopax’s liabilities. This lack of transparency has fueled investor frustration and distrust towards both Binance and Gopax’s board of directors.
In contrast to Binance’s actions, other cryptocurrency exchanges like Gemini have announced plans to compensate a higher percentage of their affected customers using bankruptcy compensation. This discrepancy in compensation plans has further highlighted the questionable decisions made by Binance in handling the aftermath of the GoFi service suspension.
The controversy surrounding Binance’s sale of Gopax victim claims has also raised concerns about potential money laundering activities. The Financial Supervisory Commission (FSC) has requested additional information from Binance regarding these allegations, further adding to the scrutiny faced by the exchange.
Overall, the controversy surrounding Binance’s actions in selling Gopax victim claims at discounted rates has created a ripple effect in the cryptocurrency community. The lack of transparency, questionable decisions, and impact on investors’ financial well-being have all contributed to a sense of distrust towards Binance and Gopax. It remains to be seen how this situation will unfold and what actions will be taken to address the concerns raised by investors and regulatory bodies.