Sequoia Sues Cryptocurrency Exchange Binance for Alleged Agreement Breach

The founder of the world’s biggest cryptocurrency exchange is being sued by venture capital firm Sequoia Capital for reportedly breaching an exclusivity agreement.

Binance’s Zhao Changpeng is currently facing a lawsuit filed by Sequoia Capital, according to Hong Kong court filings from the 26 March and the 24 April, reports Bloomberg.

It’s alleged that Zhao and Sequoia began negotiating terms of investment in August, when the cryptocurrency platform first launched. The deal between the two would have given the venture capital firm an 11 percent stake, valuing Binance at $80 million.

Court documents show that talk continued over a period of months, and into the period when the market was experiencing record highs. However, when bitcoin saw its value rise to within touching distance of $20,000 in mid-December, the talks are said to have broken down.

It was during this time that Zhao is alleged to have also been in talks with IDG Capital, another venture capital company. Bloomberg reports that the firm brought an offer to the table that included two funding rounds into Binance, valued at $400 million and $1 billion.

The issue at hand for the cryptocurrency exchange is whether it breached its exclusivity agreement with Sequoia by talking with IDG Capital. In a bid to resolve the issue between the two companies, Sequoia has turned to the Hong Kong High Court securing a temporary injunction that prohibits Zhao from negotiating with other investors.

According to IDG Capital, it hasn’t invested in Binance nor does it have any relationship with them. Even though Zhao has said that the exchange is based in Hong Kong, he remains tight lipped on the location of its offices and servers. In the second quarter of the cryptocurrency exchange’s existence it earned $200 million while Zhao has said that it has been valued at $3 billion.

Last month, Binance received a warning from Japan’s financial watchdog, the Financial Services Agency (FSA) in March after it was operating in the country without a license.

As a result of crackdowns in China and Japan Zhao said in an March interview that he was setting up an office in Malta. At the time, the founder of Binance said:

We are very confident we can announce a banking partnership there soon. Malta is very progressive when it comes to crypto and fintech.

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