Will Binance fully repay GOFi victims?

An illustration of the Binance logo and cryptocurrencies / Reuters-Yonhap

With Binance’s acquisition of GOPAX stalled for over two years, internal tensions are rising over unresolved GOFi compensation tied to the acquisition contract, sources said Friday.

Binance says it remains committed to supporting victims’ financial recovery, pending approval from financial regulators. Still, some GOFi investors say they are uncertain whether the company intends to cover the full extent of their losses — claiming Binance has yet to formalize the scope of its commitment.

The controversy traces back to 2023, when former GOPAX CEO Lee Jun-haeng and other shareholders sold the exchange to Binance at a steep discount, under the condition that Binance would fully compensate GOFi investors.

GOFi was a yield-bearing product offered by GOPAX, allowing users to earn interest in depositing virtual assets. But when crypto lender Genesis Trading — GOFi’s operator — became insolvent in the wake of the 2022 collapse of FTX, customer deposits were effectively frozen.

To date, approximately 150 billion won ($107.2 million) from 3,000 investors remains inaccessible. As delays in compensation persist, the scale of the losses has more than doubled.

In an official statement, Binance attributed the delay in compensation to "necessary conditions" for repayment that have not yet been met. While the company did not provide further details, the delay is widely believed to stem from regulatory holdups.

What many victims want is reassurance about what will happen after the approval.

Park Sang-jin, a senior foreign attorney at Seoul-based SL Partners, told The Korea Times that Binance has so far avoided confirming whether it intends to fully repay the withheld amounts. Park, whose close acquaintances, including Lee, were involved with GOPAX from its early days, has incurred financial losses totaling 900 million won through GOFi.

"At a seminar (held at the National Assembly on May 8 to address compensation for GOFi investors), I asked directly — will Binance fully compensate the losses? Will it continue operating GOPAX after the approval (and not exit)?" Park said. "But they kept deferring answers. And the official statement released afterward included no direct response."

Industry officials, including representatives from GOPAX and Binance, and GOFi investors attend a seminar on compensation for GOFi investors at the National Assembly in Seoul, May 8. Courtesy of GOPAX

Instead, Binance said that restoring GOFi investors’ rights remains its "top priority."

The core issue, Park and others note, is that the debt burden carried by GOFi has grown significantly as cryptocurrency prices have surged. When FTX collapsed in 2022, Bitcoin traded at around 22 million won. As of Friday, it had climbed to 154 million won. Ethereum has similarly risen — from 1.7 million won to 3.69 million won during the same period.

In 2023, Binance assembled a "crypto basket" containing the amounts of Bitcoin, Ethereum and other virtual assets owed to GOFi investors.

However, in October 2024, GOPAX proposed setting the price of Bitcoin at 28.06 million won in an effort to sell Binance’s shares to Megazone amid a regulatory standstill — a proposal that failed to gain investor approval.

"They mentioned there was a crypto basket in place," Park said. "So once financial authorities give the green light, they could just distribute it. But they keep hinting that prices have gone up and that it’s now more expensive than before."

"The question is: If the company bought it at a low price under the condition of full repayment, why aren't they repaying in full?" Park said.

Binance declined to disclose specific contract terms, citing a nondisclosure agreement. However, the company stated it is making every effort to resolve the issue despite the challenges.

"Binance is actively seeking viable funding solutions to facilitate the repayment of unpaid balances, in close cooperation with multiple stakeholders," a Binance official said. "If our goal were not to protect and support GOFi investors, we would not have continued navigating such a complex situation."

For investors, Binance remains their only hope. If the company were to withdraw from the Korean market or shut down GOPAX entirely, their chances of recovery would all but vanish.

"I hope the government approval will be conditional on full repayment," Park said. "If they honestly can’t repay in full, then we need to know what percentage they can cover — we need that clarity to plan our financial futures."