Crypto Exchange Binance Founder Denies Sequoia’s Exclusivity Breach Allegations

News | April 26, 2018 By:

Binance exchange founder Zhao Changpeng has denied allegations made by venture capital firm Sequoia Capital China (SCC) that he breached an exclusivity agreement.

Sequoia sued Zhao for allegedly breaching an exclusivity agreement during negotiations for an investment deal which broke down last year. According to Hong Kong court documents dated March 26 and April 24, Zhao and Sequoia began negotiating terms in August 2017 for an 11% stake in Binance at a proposed valuation of $80 million. However, during December, as the price of bitcoin reached its all-time highs, the talks broke down.

On December 14, Zhao’s team told Sequoia that Binance’s existing shareholders thought their proposed deal undervalued the exchange. Around the same time, San Francisco-based venture firm IDG Capital showed interest in venturing into a crypto exchange. IDG Capital offered to invest in Binance over two funding rounds, valuing the exchange at $400 million and $1 billion.

Sequoia claimed that Zhao violated his exclusivity agreements with the firm when he talked to other potential investors.

In a blog post published Thursday, Binance stated that Zhao denies all of SCC’s allegations relating to the present dispute. It added that “as the substantive issues in dispute between the parties are subject to confidential arbitration proceedings, Mr. Zhao will make no further comment on the matter.”

The Hong Kong High court previously ordered Zhao to stop talking to other potential investors. Zhao challenged the injunction this month and the Hong Kong High court has since dismissed the judicial order.

“SCC obtained an ex-parte injunction without notice against Mr. Zhao at the end of December 2017,” the company said. “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.”