Binance Sued by Sequoia After Investment Deal Collapses
Zhao Changpeng, founder and creator of the world’s largest cryptocurrency trading exchange, and California-based venture capital firm Sequoia Capital are currently having an issue on a funding deal gone awry.
In a recent post by Bloomberg news on Wednesday, The firm, Sequoia Capital, is suing Zhao Changpeng for allegedly breaching an exclusivity agreement.
“The trading platform’s meteoric rise has been one of the virtual currency industry’s most remarkable growth stories, landing Zhao on the cover of Forbes magazine and helping him amass a personal fortune that he claims is worth as much as $2 billion. Binance has also attracted scrutiny from regulators, who’ve been clamping down on digital-asset exchanges around the world amid concern that the venues may be flouting securities laws.” Reported Bloomberg news.
According to court documents from Tuesday, March 26, it stated that the case stems from a talk that the two had on “injection of capital from Sequoia to Binance that started in August of last year when the platform was first launched.”
“As the talk continued, Zhao reportedly 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 percent stake in the firm would not match the expectations of the firm’s shareholders.” Reported Coindesk.
But as they continued with the deal, it’s also been reported that Zhao had other plans with another potential investor IDG Capital, whose interest involves an investment in Binance over two funding rounds and evaluated the firm at $400 million and $1 billion, respectively. And it’s because of this that Sequoia is blaming Zhao for breaking the “claimed exclusivity agreement.”
“Bloomberg states that, although the firms 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 reportedly ordered Zhao not to talk to other investors until a hearing can be held to rule whether Zhao is liable over the allegations.” Stated Coindesk.
