World's largest crypto exchange Binance approved to enter Korean market

Binance CEO Richard Teng, left, speaks to reporters at a lounge in Seoul, Sept. 8. Courtesy of Binance

The world’s largest cryptocurrency exchange, Binance, has officially entered the Korean market after completing its acquisition of local crypto exchange GOPAX, more than two years after the initial deal, according to financial authorities and industry officials Friday.

With final approval from financial authorities, attention is now focused on whether this move will disrupt the domestic market dominated by Upbit and Bithumb. Competition in user services is also expected to intensify.

The Financial Intelligence Unit (FIU) under the Financial Services Commission, Korea’s top financial regulator, approved GOPAX’s executive change filing late Wednesday night, enabling Binance to take effective control of the exchange.

Binance became GOPAX’s largest shareholder in February 2023 by acquiring a 67 percent stake. The company then submitted the executive change notification to the FIU in March 2023, but domestic regulators had not processed the filing for two and a half years.

Authorities had been cautious in reviewing the notification, citing concerns that Binance’s acquisition of GOPAX could potentially impact Korea’s anti-money laundering (AML) system.

Binance was sued by the U.S. Securities and Exchange Commission (SEC) for allegedly providing services illegally to U.S. users and misusing customer funds. The company was also fined $4.3 billion for violations of U.S. anti-money laundering and sanctions laws linked to deficiencies in its internal control systems.

Korean authorities’ approval comes after much of the company’s regulatory risk was alleviated following a settlement with U.S. authorities and the appointment of a new CEO.

GOPAX is now expected to serve as Binance’s main operation in Korea.

Industry insiders say the exchange will gradually work on stabilizing Korean won deposit and withdrawal services and integrating with global liquidity channels.

Repayment of GOPAX’s debt to GOFi investors is also expected to be expedited.

GOFi is a deposit product from GOPAX that provided interest to customers who deposited digital assets. However, following the 2022 bankruptcy of the FTX cryptocurrency exchange, its operator, Genesis Trading, became insolvent, effectively freezing customer funds. As of now, approximately 150 billion won ($106 million) belonging to about 3,000 investors remains frozen.

Industry observers suggest that integrating Binance’s substantial liquidity and technological capabilities into the GOPAX platform could significantly alter the market share dynamics of Korea’s cryptocurrency exchanges.

As of Tuesday, Upbit controlled 67.9 percent of the market, with Bithumb at 28.7 percent, effectively forming a duopoly.

“Binance’s entry may intensify competition among domestic exchanges, though the opaque governance and internal controls of its global headquarters remain a risk factor,” an official in the cryptocurrency industry said.