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Crypto exchange Binance’s entry into the South Korean crypto market has raised concerns amid 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 re-enter South Korea after two years.
Binance’s entry into South Korea risks an increase in financial crimes in the country, reported local media Chosun Ilbo on February 23. According to South Korean financial authorities, financial crimes such as money laundering, illegal foreign exchange transactions, and fraud could increase due to hidden details on Binance’s management, governance structure, business method, and accounts.
A high-ranking official from the financial authorities said:
“If Binance conducts exchange business in South Korea, it will be difficult to properly supervise it. There is a possibility of outflow of national wealth through the distribution of several unverified overseas listed coins.”
The South Korean regulator is 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-accredited as a virtual asset operator (VASP). The authorities are reconsidering whether to continue or remove bank’s ties with GOPAX after the acquisition by Binance.
Binance purchased the majority stake from CEO Lee Jun-haeng, who had a 41.2% stake in GOPAX. Barry’s Silbert’s Digital Currency Group is the second largest shareholder of GOPAX. The crypto exchange Gopax has already replaced key executives with Binance personnel, such as appointing Binance’s Asia Pacific representative Leon Pung as the new CEO.
Binance Facing Regulatory Attack in the U.S.
Binance faces heightened scrutiny following the collapse of FTX. The US SEC and the NYDFS targeted Paxos to stop minting Binance USD (BUSD) stablecoin on Feb 13, defining it as a security.
The U.S. DOJ is investigating Binance for possible money laundering violations. Moreover, Binance announced that it is ending business relationships with partners in the U.S. due to stringent regulatory conditions.
However, South Korea’s regulators also consider ending Upbit’s monopoly in the country with Binance’s entry in South Korea.
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