Changpeng Zhao, founder of the world’s largest crypto-currency exchange, by both trading volume – that often exceeds $1.5 billion a day – and perhaps also by user numbers, has denied an allegation that he breached an exclusivity agreement with venture capital giant, Sequoia Capital.
According to trial documents submitted to the Hong Kong High Court, Sequoia began funding negotiations with Binance in August, after which the VC valued the exchange at around $80 million.
As Bloomberg reported, court documents showed that as crypto-currency prices soared at the end of 2017, and Bitcoin traded at record levels and approached $20,000, the negotiations between Sequoia and Binance broke down.
In December, Zhao told Sequoia that Binance thought their proposed deal undervalued the exchange and, around this time, Zhao was approached by another VC firm, IDG Capital, with an offer that valued Binance initially at $400 million and then, after a funding round, at $1 billion.
Sequoia obtained a Hong Kong High Court “ex parte injunction without notice” against Changpeng Zhao at the end of December 2017, but after the latest hearing, on April 24, a blog from Zhou’s legal team suggests that the Hong Kong court has ruled the initial injunction should not have been granted. The blog post also says that the court has ordered Sequoia pay Zhao’s legal costs, although both statements remain unconfirmed.
“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 [Sequoia]” said the post, that was addressed to “Fellow Binancians” and signed by the Binance Legal Team.
“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,” concludes the post.
Zhao, who is 41-years-old, said to be a billionaire and has been on the cover of Forbes magazine, made headlines again in March when he said he was moving his exchange to the tiny Mediterranean island of Malta after receiving increased regulatory pressure in Asia.
Sequoia has as yet made no comment on this week’s court proceeding.
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