Sequoia Sues Cryptocurrency Exchange Binance for Alleged Agreement Breach

Crypto Billionaire Sued By VC Firm After Deal Sours

In a blog post published Thursday, Binance issued a response to a report yesterday which revealed that Zhao is now facing a lawsuit filed with the Hong Kong High Court by venture capital giant Sequoia Capital.

We might get a rare chance to take a glimpse behind the curtains as a legal dispute shapes up between Zhao Changpeng, the founder of Binance, and a unit of Sequoia Capital.

Binance's dramatic growth has been one of the cryptocurrency industry's most outstanding growth saga, which landed Changpeng on the cover pages of Forbes magazine and helped him build up a personal fortune that he claims worth nothing less than $2 bln. 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.

Sequoia Capital has moved to sue the founder of Binance which is at this point in time the largest cryptocurrency exchange in Hong Kong.

Talks advanced for some months, in which time prices of cryptocurrency also soared to all-time highs. Bloomberg reports that the firm brought an offer to the table that included two funding rounds into Binance, valued at $400 million and $1 billion.

In August, Zhao and Sequoia started negotiating terms of an investment in Binance which would have valued their exchange at about $80 million and Sequoia would have acquired an 11 percent stake in the exchange. The deal would have given Sequoia a almost 11 percent stake and valued the exchange at about $80 million. However, when bitcoin saw its value rise to within touching distance of $20,000 in mid-December, the talks are said to have broken down.

"At issue is whether Zhao's talks with IDG Capital violated his exclusivity agreements with Sequoia", Bloomberg reported. In a bid to resolve the issue between the two companies, Sequoia has turned to the Hong Kong High Court securing a temporary injunction that prohibits Zhao from negotiating with other investors. Menlo Park, California-based Sequoia, which has backed companies including Google, Airbnb Inc. and Dropbox Inc., declined to comment. However, IDG told a news outlet that it has no relationship with Binance and has no investment in the firm.

Last month, Binance received a warning from Japan's financial watchdog, the Financial Services Agency (FSA) in March after it was operating in the country without a license. Zhao has refused to provide an official financial statement that would detail Binance's earnings, nor has he offered any proof of his own personal wealth. Bitcoin, the world's most popular cryptocurrency, has lost about half its value since hitting an all-time high in mid-December.

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