According to Hong Kong court filings on March 26th and April 24th, Sequoia Capital China [SCC] sued Changpeng Zhao, the founder, and CEO of the largest cryptocurrency exchange for a deal gone wrong.
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.
Negotiations broke down when Bitcoin traded at about $20,000, making a record. However, before this, when the prices were soaring, the deal was still on. Sequoia was informed that Binance’s existing shareholders thought that their deal undervalued the exchange.
Later, the Binance CEO approached IDG Capital for an offer that could bring two round of funding $400 million and $1 billion into the exchange, which was a better deal than the one with Sequoia. Based on a statement made by Zhao, Binance wanted to partner with VC firms only to secure operating licenses with regulators.
The issue that arose, in this case, was whether Zhao had violated his agreement with Sequoia by making an offer to IDG Capital. Although they were planning to settle the problems themselves, Sequoia turned to the Hong Kong High Court. As a result of which, a judicial order was passed against him, according to which he could not negotiate with other investors. On the other hand, IDG claimed to have no relationship with Binance.
The latest update on this dispute is a statement made by Binance, which states:
“SCC obtained an ex parte injunction without notice against Mr. Zhao at the end of December 2017. After a hearing attended by both parties’ legal representatives in April 2018, the High Court of Hong Kong has now determined that this injunction should not have been granted, as it had been improperly obtained and constituted an abuse of process by SCC. On this basis, SCC was ordered to pay Mr. Zhao’s costs in relation to the legal proceedings.”
They went ahead to say that Mr. Zhao ‘denies all allegations regarding this dispute’.
Alexander Plitt, a market enthusiast tweeted:
“haha, nothing really to announce here except that a preliminary injunction was improperly obtained. Nothing about the merits of the dispute. Kind of a non-announcement in my opinion.”
Avo Ginanian, a Twitter user said:
“Savagery from CZ. Its funny how transparency is relating directly to a strong positive community. Congrats!”
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