Gopax, a leading South Korean cryptocurrency exchange majority-owned by Binance, reportedly sold its users' deposit claims at a significant markdown in August 2023.

According to a report by local news agency Hankyung, Gopax owes approximately 100 billion Korean won ($51.4 million) to its users due to exposure to Genesis Global, a failed institutional crypto lending firm that collapsed in November 2022. Allegedly, Gopax has paid out only 50% of this amount to users, leaving a remaining debt of 50 billion won.

The unpaid digital assets, valued at 35 billion won during the crypto market's downturn in November 2022, have now surged to 100 billion won, assuming a Bitcoin price of $69,000 per Bitcoin. This increase in debt liabilities has left Gopax in a state of "complete capital impairment," as reported by the Korean Times in March.

Genesis, the operator of Gopax's crypto custody service GoFi, faced significant financial troubles due to exposure to the ill-fated Singaporean hedge fund Three Arrows Capital. To address its debt, Gopax reportedly sold its Genesis creditor claims at a reduced price to a third party, using the proceeds to partially compensate affected users. The exchange has postponed payment of the remaining 50% of the damages, citing completion of Gopax's acquisition as a condition for payment.

Binance acquired a substantial equity position in Gopax in February 2023, signaling a return to the South Korean market. However, legal challenges, including a lawsuit by the United States Securities and Exchange Commission against Binance, delayed the acquisition process. The Financial Service Committee of South Korea initiated a review of the deal in response to these legal issues.

Meanwhile, Genesis recently obtained approval in U.S. bankruptcy courts to distribute $3 billion in cash and cryptocurrency to its creditors. Despite objections from Digital Currency Group (DCG), the parent company of Genesis, the court ruled in favor of returning assets to creditors, leaving DCG with no recovery from Genesis' bankruptcy proceedings.