Binance Genesis Asset Sale Leaves Gopax Investors with Heavy Losses
Binance sold the asset claims of Gopax victims for less than half their value, exacerbating financial distress among investors. This action directly contradicts previous commitments to fully compensate victims of the ‘GoFi’ service, leading to significant financial repercussions 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, instead of utilizing its funds for compensation, Binance opted to sell the asset claims at a steep discount. This decision came at a time when cryptocurrency prices were climbing, thereby widening the financial gap suffered by creditors. Following this sale, Bitcoin (BTC) and other major cryptocurrencies saw a surge in value, further inflating the losses for Gopax’s creditors.
Additionally, an anonymous insider revealed details of the transaction to Hankyung, a local news outlet. According to this source, Binance used the proceeds from the discounted sale of Genesis claims to address only the first round of payments, which amounted to 15 billion won. The source highlighted that subsequent compensations were delayed, and promises to cover remaining claims post-acquisition still needed to be met, 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. Genesis, a virtual asset deposit service linked with Gopax, has pledged to return 77% of around $3 billion in bond funds to creditors. In contrast, Gemini, another cryptocurrency exchange affected by Genesis’ issues, 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. Kavuri condemned the practice of selling assets at discounted rates that significantly undervalue the assets’ current market prices, citing instances where assets sold for fractions of their value appreciated significantly after that.
The manner in which Binance handled the asset claims has not only resulted in financial losses but also fostered distrust among Gopax investors. The company’s board, which includes representatives from Binance, has been accused of being opaque about the sources of funds used to compensate investors. This secrecy, coupled with the 50% discount on the sold Genesis claims, has intensified frustrations among investors.
Moreover, 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. The FSC is also 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.
Also Read: Vanguard Files Specialized Fund With Special Mention of Digital Currency
The post Binance Genesis Asset Sale Leaves Gopax Investors with Heavy Losses appeared first on CoinGape.
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