"Since there are no grounds for rejection under the Specific Financial Transactions Information Reporting and Use Act, a report that should be resolved within 45 days at most has been delayed for over a year and a half. More than 3,300 victims have lost their precious everyday lives due to damages exceeding 160 billion won."Victim A of GoFi
Victims of the GoFi incident are trapped in the time of November 2022. They have informed financial authorities, the National Assembly, and the Anti-Corruption and Civil Rights Commission through various methods such as letters and petitions, but have not received any responses. During that time, the price of Bitcoin, which was around $22,000, has soared to over $120,000, increasing more than five times.
The victim group started a relay one-person protest in front of the government office building on Sejong-daero in Seoul since May. Since each member has work commitments, it is difficult to hold daily group protests. Even in the scorching summer heat, with temperatures rising to 36℃ at noon, they stand holding placards every day. The victim group plans to continue their protests in the sweltering heat until the government and financial authorities provide an answer.
◇ Investment-type financial product GoFi, with a debt amount of 160 billion won
GoFi is a virtual asset deposit service from the domestic virtual asset exchange Gopax. When investors deposit virtual assets such as Bitcoin, they are managed through the overseas operator Genesis Global Capital, which pays a certain interest rate. It is similar to a fintech-based investment-type financial product, allowing stable returns while investing in short-term liquid assets like money market funds (MMFs).
However, after the global exchange FTX declared bankruptcy in 2022, the operator Genesis fell into a state of insolvency. Withdrawals of user assets deposited in the GoFi product were also blocked. At that time, it was thought that the damages could be recovered through Genesis Capital. However, in January 2023, as Genesis Capital ultimately filed for bankruptcy, Gopax, which is one of over 100,000 creditors, became unable to recover its damages.
The total amount of damage at that time was estimated at about 1,000 Bitcoins. At the time, the price of Bitcoin was 28 million won. However, it has now surpassed 150 million won, causing the debt amount to surge more than five times. Based on the current Bitcoin price, the debt that Gopax must repay amounts to 160 billion won. Gopax has continued to incur liabilities in a state of capital impairment, effectively losing its ability to resolve the issue on its own.
The only solution is Binance. Binance, the world's largest virtual asset exchange, has expressed its willingness to take responsibility for repaying the outstanding amounts of GoFi while acquiring Gopax. However, financial authorities are questioning the eligibility of Binance's major shareholders. The Financial Intelligence Unit (FIU), an agency under the Financial Services Commission, has been withholding approval for changes in executives at Binance based on violations of anti-money laundering laws, opaque financial and business structure risks, and the criminal history of executives, raising concerns that Binance's management may engage in money laundering activities in Korea through Gopax.
◇ Binance's major shareholder change not approved without clear reasons
However, Binance's legal risks have virtually all been resolved. The FIU pointed out former CEO Changpeng Zhao, but he has stepped down, and the U.S. Securities and Exchange Commission (SEC) dropped 13 charges against Binance and Zhao for operating an unregistered exchange and securities-related violations last May. Accordingly, Binance has established a branch in the U.S. and has begun normal business activities.
Attorney Shim Jae-hoon, representing the victims of GoFi, noted, "There are no grounds for the rejection of the executive change report for Gopax under the Specific Financial Transaction Information Act, yet the FIU has neither approved nor rejected it for a long period of two years. If there were legitimate grounds for refusal under the law, the victim group could contest it legally, but postponing approval is a very irresponsible behavior on the part of financial authorities."
The victim organization from GoFi is recently expressing hope for a government trend that is friendly towards virtual assets. In particular, they anticipate that the new chair of the Financial Services Commission will lead to a change in the head of the Financial Intelligence Unit (FIU) that processes the executive change approvals of virtual asset exchanges. They expect that there may be a lot of attention towards the GoFi incident during this process.
Sa Hyo-ri, chairwoman of the GoFi victim group, stated, "The Gopax incident is not just a simple corporate failure, but a structural disaster caused by the inaction of administrative agencies. The victims are predominantly young individuals, with 90% being small investors under 100 million won, so we earnestly hope that action will be taken to resolve this issue."