Companies

Binance CEO is suing Sequoia Capital for damages

May 23, 2019, 4:45AM EDT

Binance CEO Changpeng "CZ" Zhao is suing Sequoia Capital, a giant VC firm, for damages, claiming it damaged his reputation and stopped him from raising funds for the major crypto exchange he helms, CoinDesk writes.

The case stems from a previous legal spat between the two parties. In December 2017, Sequoia Capital's China subsidiary obtained an injunction order against CZ, claiming he breached an exclusivity agreement by pursuing funding from IDG Capital during Binance's Series A round. CZ was forced to stop raising funds for three months, until March 1, 2018, before all charges against him were dismissed in December. CZ claims that the now-defunct injunction order cost him an opportunity to gain new investments at a favourable valuation.

“The injunction order has caused loss to me for which I am entitled to reasonable compensation by Sequoia,” CZ writes in the filing. “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.”

The first hearing between Zhao and SCC Venture VI, a special-purpose vehicle of Sequoia Capital China, will take place in Hong Kong on June 25. The inquiry will assess if CZ “has sustained any and what damages," although he has not yet named a figure for compensation.

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