Sequoia Capital, a venture capital firm headquartered in Menlo Park, California is suing the Chinese founder of the cryptocurrency exchange Binance, Changpeng Zhao (better known as CZ). The American VC fund reportedly accuses CZ of allegedly negotiating with another firm while he signed an exclusivity agreement with Sequoia.
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Fast Moving Target
According to Hong Kong court filings from March 26 and April 24, CZ and Sequoia started talking about terms for a possible investment by the fund in Binance in August 2017. And that the investment would have bought Sequoia almost an 11% stake in the exchange at a valuation of a mere $80 million. Unsurprisingly, as the prices of bitcoin and many other cryptocurrencies continued to rally, the deal seemed unattractive to CZ and the talks collapsed by the middle of December 2017.
In fact, by the start of 2018 Binance claimed to be the largest cryptocurrency trading venue in the world with over 2.9 million users joining the platform since its launch in July of 2017. Based on that incredible growth the exchange was more fairly valued in the hundreds of millions or even billions of dollars. And by December 14, CZ’s people informed Sequoia that Binance’s existing shareholders considered their proposal to undervalue the exchange, as Bloomberg reports.
Talking With IDG Capital on the Side?
It looks like Sequoia suspects that CZ didn’t reject their offer just because of the soaring valuation mismatch but because he received a competing better proposal. He was allegedly approached by IDG Capital offering two rounds of funding, valuing Binance at $400 million and $1 billion. This was at a time when Sequoia had an exclusivity agreement with CZ. Now the exchange founder and the VC fund are reportedly planning to settle this case in arbitration. IDG responded to the news by saying that it did not invest in Binance and denied any relationship with the exchange.
The Hong Kong based exchange has a global offering and supports multiple languages including English, Japanese, Chinese, Korean, Russian, Spanish, French and German. Last month Prime Minister Joseph Muscat warmly welcomed the Binance cryptocurrency platform to Malta, the “blockchain island”.
Does this lawsuit sounds like it has any merit? Share your thoughts in the comments section below.
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The post Binance Exchange Founder Sued by VC Fund Sequoia Capital appeared first on Bitcoin News.
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