Binance is facing allegations of secretly selling user deposit claims of its South Korean affiliate Gopax to Genesis Global Capital at a steep discount, without obtaining consent from investors, according to a report by South Korean news outlet Hankyung.

Last year, Binance acquired a majority stake in Gopax, one of South Korea's leading cryptocurrency exchanges, promising to compensate investors for losses incurred from Gopax's crypto custody service, GOFi, affected by Genesis Global Capital's collapse in 2022.

Despite Binance's initial commitment to fully reimburse GOFi-Genesis losses through its Industry Recovery Initiative (IRI), which covered the first round of payments, the second round allegedly involved the sale of GOFi user deposit claims at a heavily discounted value of less than 50% to a third party in August 2023, concealed from investors.

The report suggests that this undisclosed transaction, not made with investor consent, was carried out jointly by Binance and Gopax. Meanwhile, Gopax has yet to address Genesis' recent $2 billion settlement, as it reportedly sold user claims at a much lower value than their current worth, potentially resulting in additional losses for GOFi investors.

The remaining 50% of GOFi debt, initially valued at 35 billion won during Genesis' collapse, is now estimated to exceed 100 billion won due to bitcoin's appreciation. The timeline for compensating investors in full remains unspecified.

Despite the acquisition, local authorities have delayed approving Gopax's transfer of ownership to Binance, citing concerns about the latter's legal issues in the U.S. Binance has expressed intentions to reduce its shares in Gopax to alleviate compliance pressures, with CEO Richard Teng engaging with South Korean financial regulators earlier this year.

Neither Gopax nor Binance has provided immediate comments on the allegations.