News

Crypto exchange Binance is being sued by Sequoia after investment deal falls apart

Zhao Changpeng, the founder of Binance is currently facing a lawsuit brought to the high court in Hong Kong by California-based venture capital firm Sequoia Capital for allegedly breaching an exclusivity agreement.

According to Hong Kong court filings on March 26 and April 24, Sequoia sued Zhao over a funding deal gone awry. The filings shed light on Zhao’s interactions with big-name venture capital firms and reveal details about how they’ve valued Binance, the exchange that Zhao started just nine months ago.

Zhao told Sequoia in mid-December – when the price of bitcoin has surged to a record high of nearly $20 000 – that a proposed valuation of $80 million for an 11% stake in the firm would not match the expectations of the firm’s shareholders.

As the deal fell through, Zhao was also in talks with another potential investor IDG Capital, which expressed interest in investing in Binance over 2 funding rounds and evaluated the firm at $400 million and $1 billion, respectively. As such, Sequoia is accusing Zhao for breaching the claimed exclusivity agreement.

Although the companies planned to settle the matter in arbitration, Sequoia turned to the court to prevent Binance talking to other potential investors. The court in Hong Kong has ordered Zhao not to talk to other investors until a hearing can be held to rule whether Zhao is liable over the allegations.