Changpeng Zhao, the CEO of world’s largest cryptocurrency exchange Binance has filed a lawsuit against VC giant Sequoia Capital. This is a counter lawsuit by CZ in response to the one filed by Sequoia last year after a funding deal went awry.
CZ submitted his latest lawsuit filing in a Hong Kong court on Monday, May 20. Moreover, he has also sent an application to the court through his attorneys seeking a hearing on an order for “immediate summary of assessment of damages.”
CZ has accused a unit of Sequoia for hurting his reputation and preventing him from raising money at favorable times. Thus, CZ is seeking monetary damages and compensation from the VC giant, according to a CoinDesk report.
As per the information available on the court, the hearing of this case will happen next month on June 25. The application demands an inquiry into the damages suffered by CZ as a result of the lawsuit filing by Sequoia on December 27, 2017. It also notes that the lawsuit prevented CZ from raising any capital from other investors for three months until March 1, 2018.
If the damages claimed by Zhao turn out to be true, the Binance CEO demands that Sequoia should pay them as per the agreement at the inquiry. In the lawsuit filing, Zhao notes:
“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.”
The Fight Between Binance and Sequoia
In December 2017, Sequoia accused Binance of talking to IDG Capital and breaching exclusivity still when their talks for Series A funding round were undergoing. Sequoia has pursued ex parte application without any notice to Zhao.
In April 2018, a Deputy High Court Judge ruled that Sequoia was wrong to purse and ex part application without making any efforts to involve both the parties. The Judge said:
“I agree that the use of the ex parte procedure without notice to D. [Defendant, Zhao] was an abuse of process. If the Injunction were not already spent, I would have set it aside on that basis alone.”
Also, in the later months, a three-member Tribunal was formed at the Hong Kong International Arbitration Center. The Tribunal studied the case and discussed with both parties in the months ahead. Later in December 2018, the Tribunal dismissed Sequoia’s charges saying that Binance’s discussions with IDG Capital were for the Series B funding round and not for the Series A round.
Trouble for Binance Continues
Earlier this month, Binance suffered a massive hack losing around 7000 BTC tokens worth $40 million. The hackers were able to get access to 2FA codes, API keys, and other user info resulting in a security breach. Although Binance has assured to pay back the victim from the exchange funds, it has left a bad impression on the entire crypto industry.
On Wednesday, May 22, users reported losing several thousand dollars after severe lags on the Binance trading platform. The losses were the result of traders unable to exit trades due to the lags.
I lost almost 3 btc
— seanray (@seanray_7) May 22, 2019
Binance CEO Changpeng Zhao tweeted after a few hours about the platform resuming to normalcy.
order new/cancel should be restored now. Historic orders may still take further time to fully sync up. Some deposits may be missing, but will be sync'ed shortly. Found an issue with a logging service under load. Will address accordingly. https://t.co/5a274tfmc9
— CZ Binance (@cz_binance) May 22, 2019