Withdrawal Blocked on Gopax Deposit Service... Is Korea's First 'Coin Default' Coming?

Freestyle GoPie Withdrawals Blocked
Fixed Products with 1-2 Days Left Mature Tomorrow
"Coin and Deposit Withdrawals Could Escalate"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Amid the suspension of withdrawals for flexible products in Gopay, a coin deposit service operated by the domestic virtual asset exchange Gopax, all eyes are on whether the principal and interest of fixed-term products, which are due tomorrow, will be repaid. This incident arose as the operating company halted repayments following the global exchange FTX's bankruptcy, and if the withdrawal suspension prolongs, the possibility of a 'coin run' (mass withdrawal event) cannot be ruled out.

According to industry sources on the 23rd, there are currently six fixed-term Gopay products with set maturities. Among them, a product that gathered 113.33 Bitcoins and guaranteed an annual interest income of 1.25% is scheduled for payment at 10:30 AM on the 24th. The value of the Bitcoins raised amounts to approximately 2.545 billion KRW. Another product, which raised 877,963 USDC stablecoins (about 1.224 billion KRW) designed to be pegged to fiat currency and promised an annual interest rate of 6.50%, is scheduled for payment at 10:30 AM on the 25th.

The repayment of principal and interest for two products approaching maturity is currently uncertain. On the 21st, Gopax announced through a notice that "due to rapid market instability and to protect customer assets, a repayment request was made to Genesis for the entire balance of Gopay flexible products," adding, "We received confirmation that the repayment request would be fulfilled within a maximum of three days according to the contract."

However, "this has not been fulfilled as Genesis announced a temporary suspension of new lending and repayments, and the compliance with the maturity of fixed-term products, which are soon due, is also uncertain," the notice stated.

This situation began when withdrawals for flexible Gopay products, which allowed free coin deposits and withdrawals, were blocked. On the 16th, Gopax posted a notice titled 'Notice of Withdrawal Delay for Gopay Flexible Products' to inform users of this fact. Gopax has been providing Gopay, a service where users deposit cryptocurrency and receive interest income in coins during the deposit period. Genesis, a subsidiary of Digital Currency Group (DCG), Gopax's second-largest shareholder, operated Gopay. However, problems arose as Genesis fell into a liquidity crisis due to the FTX incident and halted repayments.

A Gopax official stated, "We are in discussions with global blockchain companies regarding liquidity supply and have made some progress," adding, "Since there have been no withdrawal delays for fixed-term Gopay products yet, we will respond based on the actual payment status."

However, if withdrawals for fixed-term products are not properly honored following the flexible Gopay products, distrust in both Gopax and the coin market could increase. Furthermore, it could escalate into a bank run with a flood of large-scale withdrawal requests. On cryptocurrency-related online communities, posts such as "Praying for Gopay's safety" and "In a state of insomnia" have appeared.

An industry insider said, "In Korea, the impact of the FTX crisis was not significant, but the Gopay incident is the first tangible case that can be felt," adding, "If investors cannot actually retrieve their invested funds, trust in exchanges will decline, potentially leading users to withdraw coins and deposits."

Financial authorities are currently monitoring the market situation and preparing for any possible scenarios. A Financial Services Commission official said, "So far, no major fluctuations have occurred," but added, "However, we are closely watching as the coin market is currently highly volatile."

This content was produced with the assistance of AI translation services.