Gopax’s Investor Sues Korean Agencies For Delay Binance Deal That Leads To $38M Loss

Key Points:

• Investors and legal representatives of GoFi, a wealth management product owned by Gopax, have filed a lawsuit against top financial authorities in South Korea.
• They allege that the authorities did not accept Gopax’s report of operator change, which prevented GoFi from reopening withdrawals, resulting in a loss of $38 million.
• Binance had proposed acquiring Gopax to provide liquidity for the withdrawal of GoFi deposited funds but intended to proceed only if the financial authorities approved the change report.

According to an Asia Economic report, investors and legal representatives of GoFi, a wealth management product owned by South Korea’s crypto exchange Gopax, have filed a lawsuit against the Chairman of the Financial Services Commission, the Governor of the Financial Supervisory Service, and the Director of the Financial Services Commission’s Financial Intelligence Unit (FIU).

They alleged that these agencies had not accepted the report of Gopax’s operator change for a long time, which made GoFi unable to reopen withdrawals, and demanded them to compensate for the loss of 50 million won ($38 million).

Earlier, Genesis Trading, which ran GoFi after the global virtual asset market FTX declared bankruptcy last year, halted new loans and redemptions, and Gopax was unable to settle assets worth 56.6 billion won ($43 million). As a result, Binance, a worldwide exchange, proposed acquiring GoPax as a condition for providing liquidity for the withdrawal of GoFi deposited funds. Binance injected some assets earlier this year but intended to infuse the remainder only if the financial authorities’ VASP change report is approved.

Gopax filed a report to the Financial Intelligence Unit on March 7 reporting the change of registered executives and company operators, which was done before Binance finalized its purchase of Gopax. According to the complaint, under existing legislation, the authorities are required to submit the acceptance of the modification report within 45 days, but they did not, and the investors incurred losses as a result. They are evaluating other portions that are not covered by the legal and legal review scope.

When the FIU gets a report, it seeks it from the FSC, according to the virtual asset operator reporting guidelines. The FSC evaluates the reported papers, determines if there is a basis for rejection, and informs the FIU. After that, the FIU will inform or publicize whether or not the report was approved. The FIU shall inform the report’s approval within three months of receipt and within 45 days in the event of a change report. The time necessary for supplementation is omitted in the event of a request for supplementation of the report and related documents to certify that the reporting requirements are satisfied.

FSC postponed the evaluation of Gopax’s executive change report, which includes information concerning the hiring of three Binance members as internal directors of Gopax, on June 7. As Coincu reported, Gopax named Lee Joong-hoon as the new CEO, while previous CEO Leon Poong, who was sent from Binance, was fully removed from the management.

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Harold

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