Sequoia Capital sued Zhao Changpeng , Founder of Binance a Cryptocurrency Exchange. This legal action took place due to a funding that went wrong.
Binance is one of the fastest growing startups. Zhao Changpeng founded Binance nine months ago. Sequoia is California-based company and has backed companies like Google, Airbnb, and Dropbox.
Sequoia Capital Investing in Binance
As per hong kong filings, Zhao and Sequoia were negotiating a deal to invest in Binance in August. This deal would have given Sequoia 11% percent stake in the company. During the deal, they valued the company at about $80 million.
As days passed by we know the price of cryptocurrency changed a lot from last year August to December, it went to $20,000. On 14th December the negotiation ended. Zhao’s team informed Sequoia that they think Sequoia has undervalued the exchange.
IDG Capital comes up with a better offer
During that period, IDG Capital a VC firm made an offer that would have injected two rounds of funding. They offered a vast higher valuation as $400 million and $1 billion.
Zhao talking to IDG Capital violated his exclusivity agreement with Sequoia. Now Sequoia and Zhao are talking to settle this dispute. This dispute became public when Sequoia filled case against Zhao in Hong Kong’s High Court. The Court has temporary barred Zhao from negotiating with other investors.
Zhao said Binance value is about $3 billion and company $200 million in its 2nd quarter this year. Over the past 24 hours, Binance has traded over $3.8 billion according to Coinmarketcap.com.
What do you think went wrong between them? Comment below to let us know
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