Binance CEO and founder Changpeng Zhao has filed a lawsuit against American venture capital firm Sequoia Capital claiming monetary compensation on the grounds of reputation damage as per a report published by news website Coindesk. This lawsuit filed by Mr. Zhao, founder of one of largest cryptocurrency exchange is viewed by many as a retaliatory response to the lawsuit filed by a unit of the above-mentioned venture capital firm over a funding deal which went awry last year.
The lawsuit filed by venture capital firm Sequoia Capital had claimed that Mr. Zhao has violated a contract with them but the allegations were dismissed by the Hong Kong International Arbitration Centre last December. From details which have been made public so far, the lawsuit filed by Mr. Zhao in Hong Kong high court stated that Zhao is claiming monetary compensation on grounds of a damaged reputation.
Mr. Zhao believes the lawsuit filed by venture capital firm Sequoia had prevented him from raising money at a proper valuation for his exchange. To those unfamiliar with the name Binance, it is currently one of the largest and most successful cryptocurrency exchanges in operation so far when considering trading volume data. Sequoia is a California based venture capital firm more commonly known as one of the largest and well-reputed venture capital houses which focus on tech start-ups. As per CrunchBase website, the Silicon Valley-headquartered fund house operates 22 funds around the globe and has raised more than 15 billion USD till date. Mr. Zhao’s dealing with the firm was on a special purpose vehicle of the fund house known as SCC Venture VI from the firm’s Chinese office. Among details of the lawsuit made public is quote “immediate summary of the assessment of damages”.
The lawsuit appeals to the high court for an investigation to determine whether Zhao has sustained any damage because of Sequoia’s injection during the fundraising event in March 2018. And if the investigation committee finds damages, Zhao requests that he be awarded monetary compensation for same as deemed appropriate by the committee. When speaking of same in court, Mr. Zhao commented: “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.” Aside from news of the lawsuit, Binance was also recently in the news for a massive attack on its trading platform which led to a loss worth nearly USD 41 million. Binance is also suffering additional setbacks over customer complaints regarding loss worth several thousand dollars over server lag issue.
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