Binance's decision to sell Gopax asset claims at steep discounts has left investors reeling from heavy losses, prompting regulatory review in South Korea. This action directly contradicts previous commitments to fully compensate victims of the 'GoFi' service, exacerbating financial distress among investors as cryptocurrency values continue to rise.

Binance Sells Gopax Claims at Deep Discount

When Binance took over Gopax, it assured investors of recovering their lost funds totaling approximately KRW 70 billion ($52 million) due to halted fund withdrawals in the 'GoFi' service. However, Binance opted to sell the asset claims at a discount, despite cryptocurrency prices climbing and widening the financial gap suffered by creditors. An anonymous insider revealed that Binance used the proceeds from the discounted sale of Genesis claims to address only the first round of payments, leaving a larger portion of the debt unresolved.

U.S. Court Approves Genesis Bankruptcy Plan

Interestingly, a U.S. court approved Genesis's bankruptcy compensation plan last week, pledging to return 77% of around $3 billion in bond funds to creditors. In contrast, Gemini plans to repay 97% of its customers impacted by the bankruptcy using similar compensation funds. This disparity has prompted criticism from various quarters, including Sunil Kavuri, a leading creditor in the FTX creditor community, who condemned the practice of selling assets at discounted rates that significantly undervalue their current market prices.

Investor Outrage and Regulatory Scrutiny

The manner in which Binance handled the asset claims has fostered distrust among Gopax investors, with the company's board being accused of being opaque about the sources of funds used to compensate investors. The Financial Services Commission (FSC) of South Korea is currently reviewing an executive change report from Gopax, which includes the appointment of Binance personnel as directors, and is seeking additional information from Binance concerning allegations of money laundering and other regulatory concerns. This scrutiny comes at a critical time as the cryptocurrency market faces increased volatility and regulatory challenges globally.