The South Korean crypto exchange GOPAX could lose its right to offer fiat-coin parings, a report claimed on August 7.
Per the newspaper Chungnyun Ilbo, GOPAX’s banking partner Jeonbuk Bank is “reviewing” the parties’ “contract renewal.”
GOPAX, the outlet noted, has “been in a state of capital erosion for several years.”
GOPAX Crypto-Fiat Trading Future in Doubt?
The exchange has fallen into further financial trouble following a failed takeover attempt from Binance.
Binance snapped up a majority 72% stake in GOPAX in February 2023. At the time, the deal promised to reshape the South Korean crypto landscape.
But following regulatory intervention, Binance was forced to step back from its attempts to gain a foothold in the South Korean market.
Last month, reports claimed Binance was negotiating with the South Korean cloud service provider Megazone over the sale of most of its GOPAX holdings.
But this sale is still yet to materialize, with regulators reportedly unconvinced about its viability. And this fact appears to be worrying Jeonbuk Bank.
The bank has a “real-name” account partnership with GOPAX. Under South Korean law, only exchanges with these partnerships can apply to trade fiat.
Big Four to Return to the Fore of S Korean Crypto?
Without the banking partnership, GOPAX may have to restrict its offerings to crypto-to-crypto trading only.
Jeonbuk Bank’s entry into the crypto sector in February 2022 was seen as a watershed moment for the South Korean crypto sector.
The sector is currently dominated by the so-called “big four” exchanges – Upbit, Bithumb, Coinone, and Korbit.
Upbit alone has cornered between 60 and 80% of the market, with Bithumb accounting for much of the remainder.
Before the Jeonbuk Bank deal, only the “big four” could offer fiat trading pairs. GOPAX’s potential exit from the industry would restore the group’s stranglehold on the high-volume South Korean crypto market.
Jeonbuk Bank reportedly says it will only decide if it wants to extend its GOPAX deal after the financial authorities “make a final decision” on the Megazone takeover deal.
Temporary Reprieve in the Cards?
The bank said it is considering a temporary “conditional contract,” with its existing GOPAX contract set to expire on August 11.
GOPAX has slid into a state of “capital erosion” since it was forced to suspend its crypto management service GoPay in 2022.
The media outlet said that the fall of GoPay has sent the exchange into a financial tailspin, with its current debt “exceeding 110 billion won ($80 million).”
However, should the Megazone deal succeed, GOPAX’s fortunes could quickly reverse, the media outlet suggested.
The proposed deal would see Binance reduce its stake in the exchange’s operator to less than 10%.
South Korea’s Inflation Reaccelerates in July https://t.co/KlbxBFcc2h
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Megazone also “has a strong desire to acquire GOPAX,” the media outlet reported. The cloud provider has submitted a legally binding investment commitment letter to the regulatory Financial Services Commission.
Such a deal would allow GOPAX to “pay most of its debt” to “individual investors.”
And if the firm can return to “financial soundness is restored,” the “obstacles” standing in the way of a new deal with Jeonbuk Bank “are expected to disappear.”
Buyer Also Facing Debt Issues?
However, the media outlet claimed insiders think the sale has little chance of going through. The insiders noted that Megazone’s own debt ratio is “over 1,100%.”
The bank confirmed that its “decision on whether to extend the real-name account will be made after the Financial Services Commission makes its decision.”
A Gopax official was quoted as saying that the exchange “has nothing to say regarding the renewal of the contract.” The official added:
“We will improve transaction indicators and other factors to reduce the size of our annual debt and prove that GOPAX is a company worth investing in.”
