Binance Founder Denies Sequoia Allegations in the Lawsuit
April 26, Binance launched a statement in response to the Sequoia legal case. According to the announcement, Zhao Changpeng, founder and CEO of Binance, denies all the allegations from Sequoia Capital China (SCC) relating to the present dispute.
The legal dispute between Zhao and SCC stars after a funding deal gone away. According to Hong Kong court filings post on March 26 and April 24, a special unit of SCC started negotiating with Zhao in last August to invest Binance. They signed a term sheet regarding Sequoia investing 60 million RMB ($9.5 million USD) in Binance’s Series A round funding to get a nearly 11 percent stake and valued the exchange at about $80 million USD.
However, cryptocurrency prices surged after that. On December 14, as bitcoin traded at a record near $20,000 USD, Binance’s existing shareholders thought the exchange was undervalued in the proposed deal. In the meantime, Zhao also had contact with another VC firm, IDG Capital. IDG provided an offer of two rounds of capital injections in Binance’s Series B1 and B2 round funding with $400 million and $1 billion USD.
In the end, Binance did not conclude a deal with any of them, neither SCC nor IDG.
Sequoia sued Zhao as his negotiation with IDG violated their six-month exclusivity agreements signed on 25th of August in 2017. Zhao argued that his dicussion with IDG did not relate to Series A Financing, but related to some series B Financing. Therefore, there was no breach of the exclusivity agreements.
SCC also obtained an exparte injunction without notice against Zhao at the end of December.
According to Binance’s announcement,
“After a Hearing attended by both parties’ legal representatives in April 2018, the High Court of Hong Kong has now determined that the injunction should not have been granted as it had been improperly obtained and constituted an abuse of process by SCC. SCC was also ordered to pay the legal proceeding costs to Zhao as well.”
As the substantive issues in dispute between the parties are subject to confidential arbitration proceedings, Zhao will make no further comment on the matter.