South Korean Regulators Put Binance's Compliance to the Test Over Gopax

South Korea's Financial Intelligence Unit (FIU) has restarted its evaluation of Binance's acquisition of local cryptocurrency exchange Gopax, a process stalled for over two years due to regulatory concerns. The move, reported by Newsis on Sept. 2, signals a potential path for Binance, the world's largest crypto exchange, to re-enter the South Korean market after shuttering operations in 2021. The FIU is currently reviewing Gopax's formal report on executive changes, a step effectively serving as a suitability test for Binance's qualification as a controlling shareholder. Approval could come as early as late 2025, according to local media.

The acquisition, first announced in February 2023, was initially framed as a rescue mission for Gopax, which faced a liquidity crisis after its DeFi partner, Genesis Global Capital, froze $47 million in customer funds. Binance acquired 67% of Gopax's shares to stabilize the platform and repay affected users. However, regulators delayed approval, citing anti-money laundering (AML) risks tied to Binance's legal battles in the U.S. These included a $4.3 billion settlement with U.S. authorities over AML and sanctions violations, as well as a separate Securities and Exchange Commission (SEC) lawsuit. The FIU's renewed review appears linked to the resolution of these U.S. compliance issues, including Binance's post-settlement governance reforms.

Binance has emphasized its enhanced compliance measures, with CEO Richard Teng stating the exchange now employs 1,400 compliance staff-23% of its workforce-and has adopted a board-driven governance model. Teng also highlighted Binance's regulatory approvals in 21 countries and its cooperation with law enforcement, including 64,000 requests addressed last year. Despite these efforts, South Korean regulators remain cautious. The country's crypto framework lacks explicit rules for assessing major shareholders of exchanges, complicating the approval process.

The regulatory environment in South Korea has grown increasingly stringent. In August, the Financial Services Commission (FSC) banned leveraged crypto lending and capped interest rates at 20% to protect retail investors. The FSC also ordered exchanges to halt lending services amid concerns over forced liquidations and market instability. These measures reflect a broader push to balance innovation with risk management, including plans for a stablecoin framework and the first spot crypto ETFs.

Binance's potential re-entry faces additional hurdles. In late 2024, its attempt to reduce ownership in Gopax by selling shares to local cloud provider Megazone collapsed. The company remains Gopax's largest shareholder, but regulatory uncertainty persists. If approved, the deal would position Binance to leverage its 29 million user base and liquidity to support South Korea's ambitions to become a global crypto hub.

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