Binance To Enter the Korean Market by Acquiring Gopax, a Korean Exchange

[Executive Summary]

• According to industry sources, Binance has recently completed due diligence procedures and is taking the final steps for the acquisition of Gopax. Gopax is one of the five major exchanges in Korea, which has linked real-name accounts with Jeonbuk Bank. Once Binance enters the Korean cryptocurrency market, the dynamics of domestic cryptocurrency exchanges, which are currently dominated by Upbit, are expected to change significantly. It is expected that domestic investors will have a wider range of investment choices and that domestic projects will be able to expand overseas more easily. However, since there are concerns regarding Binance’s financial soundness, there is a possibility that Korean financial authorities may directly or indirectly challenge this acquisition.

According to an industry insider earlier this month, Binance has recently completed the due diligence process for the acquisition of Gopax and is taking the final steps to complete the acquisition procedure.

Gopax is one of the five major exchanges in Korea (Upbit, Bithumb, Coinone, Korbit, Gopax) that allows investors to buy and sell cryptocurrency with the Korean Won. In February of last year, after linking real-name accounts with Jeonbuk Bank, it started to expand its domestic business but suffered a liquidity crisis due to global economic disruptions and FTX bankruptcy.

Once Binance enters the domestic cryptocurrency market, the dynamics of the domestic cryptocurrency exchange, which is currently dominated by Upbit, are expected to change significantly. In particular, there are expectations that domestic investors will have a wider range of investment choices and that domestic projects will be able to expand overseas more easily.

Binance’s entry into the market may lead to the easing of the listing standards of DAXA, the exchange consultative body formed by the five major exchanges. Binance has the capability to expand the variety of tokens traded on Gopax, and other exchanges may increase coverage to keep up with the competition.

It is noteworthy to follow whether various derivative products traded on Binance will also be traded on Gopax. Unlike domestic exchanges that operate mainly on cryptocurrency spot trading, Binance supports the trading of derivatives for investors such as futures.

However, as Binance was embroiled in controversy over its financial soundness when the accounting firm in charge of proof of reserves announced the suspension of audits, there is a possibility that the financial authorities, which have strengthened the stance of protecting investors, would impose direct or indirect sanctions on this acquisition.

If Gopax is successfully acquired, it will establish a significant precedent for international businesses joining the Korean virtual asset market. Currently, many aspects still remain uncertain; the transaction may or may not be completed, and neither the size nor the nature of Binance’s operations in Korea have been established or announced. It is also unknown if the regulatory authorities would place new limits on exchanges held by foreign corporations, once the acquisition is completed. Follow our blog to closely track the development of Binance’s acquisition of Gopax, as well as relevant regulations in the Korean cryptocurrency market.

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