Crypto exchange Binance's entry into the South Korean crypto market has raised concerns among financial authorities in the country. The world's largest exchange Binance acquired a majority stake in South Korea's fifth largest crypto exchange GOPAX on February 3 to enter the South Korean market after two years.
Binance's entry into South Korea risks increasing financial crime in the country, local media reported today. According to South Korean financial authorities, financial crimes such as money laundering, illegal foreign exchange transactions and fraud can increase due to hidden matters, details about Binance's management, governance structure, business methods and accounts.
A senior official from the financial authority stated:
“If Binance is running an exchange business in South Korea, it will be difficult to supervise it properly. There is a possible outflow of national wealth through the distribution of some unverified overseas listed cryptocurrencies.”
South Korean regulators are considering regulating Binance, requiring it to reapply for a virtual asset service provider (VASP) license in the country. GOPAX under new owner Binance will be re-commissioned as a virtual asset operator (VASP). Authorities are reconsidering whether to continue or terminate the bank's relationship with GOPAX following the acquisition by Binance.
Binance bought a majority stake from CEO Lee Jun-haeng, who had a 41.2% stake in GOPAX. Barry's Silbert Digital Currency Group is the second largest shareholder of GOPAX. Crypto exchange Gopax has already replaced key executives with Binance staff, such as appointing Binance Asia Pacific representative Leon Pung as the new CEO.
Binance on the other hand is also facing pressure from the United States. The US SEC and NYDFS targeted Paxos to stop printing the Binance USD (BUSD) stablecoin on Feb 13, describing it as a safety measure.
U.S. DOJ is investigating Binance for possible money laundering violations. Additionally, Binance announced that it will end business relationships with partners in the U.S. due to strict regulatory requirements.
