Pressure is mounting on Binance, the world’s largest cryptocurrency exchange, to compensate victims of GOPAX’s GoFi deposit program, after a South Korean lawmaker raised the issue during a parliamentary hearing this week.
Key Takeaways:
- South Korean lawmakers are pressing Binance to compensate around 3,000 GoFi investors.
- The investor’s $106 million in funds remain frozen since the 2022 FTX collapse.
- Rep. Min Byung-dug questioned regulators on why Binance’s GOPAX acquisition was approved without a clear repayment plan.
On Monday, Rep. Min Byung-dug of the ruling Democratic Party of Korea questioned Financial Services Commission (FSC) Chairman Lee Eog-won, demanding clarity on whether Binance intends to fulfill its reported promise to reimburse investors.
The hearing followed the FSC’s recent approval of Binance’s long-delayed acquisition of GOPAX, according to a report by The Korea Times.
GOPAX’s GoFi Investors Still Frozen Out After FTX Collapse Locks $106M in Funds
GoFi was a high-yield deposit product launched by GOPAX, allowing users to earn interest on their crypto holdings.
However, after the 2022 collapse of FTX, GoFi-linked customer funds, totaling around 150 billion won ($106 million), were frozen, affecting roughly 3,000 investors.
Min argued that compensation was supposed to be a precondition for Binance’s takeover but said no repayment plan has yet been presented. “This is a merger not backed by capital,” he said, urging regulators to ensure accountability.
Binance had agreed to acquire GOPAX in 2023 as part of its push into the South Korean market.
However, the Korea Financial Intelligence Unit (KoFIU) initially blocked the deal, citing Binance’s past anti-money laundering (AML) violations in the United States.
The acquisition was only approved this month after Binance reportedly addressed compliance concerns with US authorities.
Still, the timing of the approval has stirred controversy. Opposition lawmakers questioned why the long-stalled acquisition was suddenly cleared just four months after the new administration took office.
Some even suggested political influence, pointing to reports that a senior GOPAX executive is related to a high-ranking official in the Lee Jae Myung administration.
Korean Lawmaker Alleges Binance Ties to Cambodia’s Prince Group
Adding to the scrutiny, Rep. Kim Jae-sub of the People Power Party raised allegations linking Binance to Cambodia’s Prince Group, a conglomerate cited by US authorities for alleged money laundering and human trafficking activities.
Kim referenced US Treasury reports noting Binance’s platform was used to move illicit funds for the group.
He also recalled that Binance founder Changpeng Zhao (CZ) was fined $4 billion and barred from operating in the US.
In response, Rep. Kang Min-kuk urged a probe into five Korean banks that reportedly handled overseas remittances totaling 3.96 billion won tied to the Prince Group.
FSC Chair Lee confirmed the commission is coordinating with foreign and finance ministries to evaluate potential sanctions.
In August, South Korea’s financial regulator moved to rein in risky lending practices in the digital asset sector, ordering local exchanges to suspend all crypto lending services until a proper regulatory framework is established.
The crackdown came amid South Korea’s broader pivot toward regulated crypto adoption. Authorities are lifting restrictions on institutional trading and preparing to approve the country’s first spot crypto ETFs.
President Lee Jae Myung’s administration is also working on a stablecoin framework pegged to the Korean won, signaling a more open approach to digital finance despite the latest curbs.
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