Venture Capital Firm Sequoia Sues Binance Founder Over Funding Deal
April 25, 2018 10:45 pm
The CEO and founder of Binance, Zhao Changpeng, is being sued by Sequoia for allegedly breaching an exclusivity agreement during negotiations for an investment deal which broke down last year, Bloomberg reported Wednesday.
In an appeal to Hong Kong’s High Court, Sequoia will seek a temporary injunction to bar Zhao from negotiating with other investors, causing the dispute to go public and revealing insights into venture capital firms’ past valuations of the exchange, the report said.
Binance is currently the world’s largest cryptocurrency exchange by trade volume, CoinTelegraph reported.
Citing high court documents, Bloomberg reported Zhao and Sequoia began negotiating terms in August 2017 for an 11 percent stake investment in Binance, at a proposed valuation of $80 million. As Bitcoin trading prices soared to $20,000 in mid-December, Zhao’s negotiators broke off talks, considering the deal undervalued the exchange.
When the Sequoia deal fell through, CoinTelegraph reported, the alleged exclusivity agreement breach involved another venture capital investment firm, IDG Capital, which reportedly expressed interest in investing in Binance over two funding rounds, at significantly higher valuations of $400 million and $1 billion, respectively.
IDG has responded to the news outlet’s questions, Bloomberg reported, saying it has not invested in Binance and has no relationship with the exchange. Sequoia and Zhao, meanwhile, reportedly intend to settle their dispute in arbitration.
In previous interviews with Bloomberg, Zhao has claimed his personal fortune is worth as much as $2 billion, but declined requests to provide proof of his wealth and grant access to the Binance’s financial statements. He has also reportedly said Binance does not need investment from venture capital investment firms, the report said, and is only interested in partnerships if doing so would help the exchange to secure operating licenses from regulators.
It remains to be seen if Binance’s multi-country presence can insulate it from the traditional financial system and secure room for maneuvre from regulatory requirements.
– WN.com, Jack Durschlag
