GOPAX Crypto Exchange Avoids Fiat Shutdown With ‘Temporary’ Banking Deal

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Tim Alper

Author

Tim Alper

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Last updated:

August 12, 2024 23:00 EDT

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The South Korean crypto exchange GOPAX has secured an eleventh-hour reprieve that will let it continue trading fiat parings, thanks to a “temporary” banking deal.

Per News1, the exchange has signed a new nine-month deal with its banking partner Jeonbuk Bank.

GOPAX Crypto Exchange: New Nine-month Deal

The bank has previously told GOPAX that it wants the exchange’s operator to finalize a takeover deal before it puts pen to paper on a longer-term banking deal.

Under South Korean law, only exchanges that offer real-name banking services via wallet-linked accounts can offer fiat trading.

GOPAX’s previous two-year deal with Jeonbuk Bank expired on August 11. The bank had previously warned that it would not renew its deal unless the takeover was completed beforehand.

However, the parties appear to have negotiated a temporary solution, with a new nine-month agreement.

The exchange’s fortunes have been rocked by the failure of its crypto management service GoPay in 2022.

A brighter future seemed to be on the horizon when the global market leader Binance bought a majority share in the exchange in February 2023.

However, the regulatory Financial Services Commission (FSC) decided to block this deal, and has ruled that Binance must reduce the size of its holdings from around 70% to 10%.

The cloud services provider Megazone has stepped in with a proposal to buy up Binance’s majority stake in GOPAX.

Takeover to Secure GOPAX’s Future?

However, regulators have not yet signed off on this deal. Observers say that GOPAX has been “eroding capital” for several years. And they say that Megazone also has a high “debt ratio.”

The new Jeonbuk Bank deal will provide a welcome boost for GOPAX, however. The deal will allow GOPAX to apply for a new crypto-fiat trading permit ahead of a mandatory September deadline.

In a further development, all of the nation’s fiat-trading exchanges have been ordered to submit permit applications to the FSC’s Financial Intelligence Unit by mid-September. The unit will issue a slew of new permits in October.

Megazone remains keen to complete the GOPAX takeover deal, the media outlet noted. The cloud provider reportedly submitted a Letter of Commitment to the FSC in July.