Venture capital firm Sequoia Capital is suing the founder of Binance, the world’s biggest cryptocurrency exchange, for allegedly violating an exclusivity agreement.
Binance founder and chief executive Zhao Changpeng has been sued by Californian venture capital firm Sequoia Capital in Hong Kong’s high court in relation to a financing deal that broke down between the two, last year.
Citing court documents filed on Tuesday and March 26, a Bloomberg report points to Zhao negotiating terms with Sequoia about an investment in Binance at the time of its launch in August last year.
Details from the court filings reportedly reveal terms of a deal that would’ve seen Sequoia inject a little over $8 million for an 11 percent stake in Binance in talks that valued the cryptocurrency at $80 million at the time.
Talks progressed over the following months before eventually breaking down in mid-December, when bitcoin approached its record all-time high near $20,000. The report reveals that Zhao’s team informed Sequoia that the proposed $80 million was seen as an undervaluation by Binance’s shareholders.
As the deal failed to materialize, Binance’s Zhao reportedly received a separate offer from another venture capital firm IDG Capital. The terms of the significantly higher valuation saw two proposed rounds of funding of $400 million and $ 1 billion respectively.
Sequoia is alleging that Zhao violated his exclusivity agreement with the firm after engaging in discussions with IDG Capital. While Sequoia and Zhao are still planning on settling the dispute in arbitration, Bloomberg adds that the VC firm moved to secure a temporary injunction from Hong Kong’s high court to keep Zhao from negotiating with other potential investors.
The world’s largest cryptocurrency exchange with just under $4 billion in trading activity over the past 24 hours (Coinmarketcap figures), Binance recently announced plans to move to the European island nation of Malta following regulatory scrutiny in nations like Japan.
Binance did not immediately respond to a request for comment at the time of press.
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Last modified: May 20, 2020 8:51 PM UTC