Binance founder Zhao Changpeng denied breaching an exclusivity agreement with Sequoia Capital. The venture capital firm sued the major cryptocurrency exchange in Hong Kong over a failed investment dea
Binance founder Zhao Changpeng denied breaching an exclusivity agreement with Sequoia Capital. The venture capital firm sued the major cryptocurrency exchange in Hong Kong over a failed investment deal, but the court ruled that Sequoia's temporary injunction was improperly obtained and should not have been granted.
Sequoia sought an 11 percent stake in Binance. Talks between the two companies began in August 2017 and fell apart by December. Around the time negotiations collapsed, IDG Capital approached Binance with competing funding offers: $400 million for an initial investment and another $1 billion in a subsequent round.
Sequoia responded by obtaining a temporary injunction from the Hong Kong High Court at the end of December 2017. The order prevented Zhao from talking to other investors about financing. A hearing in April 2018 with both parties' legal representatives examined the injunction. The court determined it should never have been granted.
"SCC [Sequoia Capital China] obtained an ex parte injunction without notice against Mr. Zhao at the end of December 2017," Binance said in a statement. "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."
The court ordered Sequoia to cover Zhao's legal costs. Binance rejected all allegations Sequoia had made regarding the dispute.
According to Zhao, Binance generated $200 million in revenue during its second quarter of operation. The company has a conservative valuation of $3 billion. The exchange is also setting up a Malta office after regulators in China and Japan imposed restrictions on cryptocurrency trading platforms. Establishing permanent operations had become difficult in those countries.
In an interview, Zhao described Malta's regulatory environment. "Malta is very progressive when it comes to crypto and fintech," he said.
