Changpeng Zhao, head of the Binance, intends to continue litigation with Sequoia Capital, a venture capital company, and recover compensation for its reputational losses. This is reported by CoinDesk.
As Zhao claims in a lawsuit filed in the High Court of Hong Kong, Sequoia Capital China has damaged its reputation and prevented him from attracting financing on favorable terms.
In particular, he asks the court to determine whether “the damage was caused and, if so, on what scale,” because of the injunction issued on December 27, 2017 and limiting its ability to raise funds before March 1, 2018.
The injunction order has caused loss to me for which I am entitled to reasonable compensation by Sequoia. In particular, I have suffered i) a loss of chance to raise capital through successive rounds of financing at increasing high valuations; and ii) damage to my reputation.
Sequoia Capital filed a lawsuit against CEO Binance because of a violation of the contract on the granting of exclusive rights in March last year. The subject of the proceedings began negotiations on investing $ 80 million in Binance, which began in August 2017. If they succeeded, Sequoia would have received almost 11% share in the business.
However, in mid-December, when the bitcoin price rose above $ 20,000, Zhao allegedly told Sequoia that the exchange was seriously undervalued in the terms of the negotiated deal, and the proposed amount does not meet the expectations of shareholders.
At the same time, Zhao negotiated with another potential investor in the face of venture capital firm IDG Capital, which offered to invest $ 400 million and $ 1 billion in Binance for two rounds, respectively. Because of this, Sequoia accused Zhao of violating the contract on the granting of exclusive rights and demanded to establish whether the negotiations with IDG Capital violated the terms of their deal.
Earlier, in December 2017, Sequoia Capital, unilaterally and without notice, Zhao obtained an injunction, insisting that by starting negotiations with IDG Capital, the defendant had violated the terms of the agreement on granting the exclusive right to invest in his business.
However, the court subsequently ruled that Sequoia had no reason to seek to limit investment unilaterally, without providing an explanation of why several firms were involved in the process. Attempts to challenge this decision did not succeed, and on December 12, 2018, the panel of judges finally rejected the demands of Sequoia.
Now Changpeng Zhao will act as the plaintiff, promising to give additional information on this issue soon.