South Korean Regulators Express Concerns Over Binance's GOPAX Acquisition – Coinpedia Fintech News
The world’s largest cryptocurrency exchange Binance, entered the South Korean market on February 13 for the first time in two years after it purchased the bulk of GOPAX, the fifth-largest cryptocurrency exchange there. However, according to the latest developments, financial regulators in South Korea are concerned about Binance’s foray into the local cryptocurrency market.
According to local media Chosun Ilbo, the regulators are raising concerns about a possible increase in financial crimes. Financial officials claimed that secret information about Binance’s administration, governance structure, business model, and accounts could lead to a surge in financial crimes such as fraud and money laundering.
Recently, a South Korean official made a statement expressing concerns about the operation of Binance in their country. According to the official, it would be difficult to properly supervise Binance if the company conducts exchange business in South Korea. The reason for this is that there is a risk of national wealth outflow through the distribution of unverified overseas listed coins.
To address this issue, the South Korean authority is considering restricting Binance’s operation in the country and making the company reapply for a VASP (Virtual Asset Service Provider) license. This license is required to operate a virtual asset business in South Korea, and it is designed to ensure that such businesses comply with regulatory standards and provide a safe environment for investors.
By requiring Binance to reapply for a VASP license, the South Korean authority is taking steps to ensure that the company operates within the regulatory framework established by the government. This will help to safeguard the interests of investors and prevent the outflow of national wealth through unverified overseas listed coins.
In order to stabilize the Korean cryptocurrency trading platform, the fresh money from Binance will allow GOPAX users to make withdrawals and interest payments. According to its website, GOPAX had more than 600,000 users as of March 2021.
Changpeng “CZ” Zhao, founder and CEO of Binance had earlier said “We hope that taking this step with GOPAX will further rebuild the Korean crypto and blockchain industry.”
According to a representative for Binance, the company also intends to provide GOPAX customers with access to Binance Academy, a platform for learning about blockchain technology and cryptocurrencies, in order to raise their understanding of these topics.
After experiencing troubles from the insolvent lender Genesis Global Trading, a division of the Digital Currency Group (DCG), GOPAX banned customer withdrawals from their DeFi service, GoFi, in November. GOPAX received yields on crypto loans from Genesis, while DCG, who made an investment in GOPAX in April 2021, is GOPAX’s second-largest shareholder.
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