Bitcoin & Crypto & NFT News
The founder of the planet’s largest digital assets exchange platform has been sued over two potential funding deals from different venture capital firms. Sequoia Capital allege that talks with IDG Capital in late 2017 violated exclusivity agreements between Binance and Sequoia.
Binance in Violation of Exclusivity Agreement
According to Hong Kong court documents dated March 26 and April 24, Sequoia had been engaged in talks about investment since August 2017. Over the next few months, these negotiations continued. However, during December, as the price of Bitcoin reached its all-time highs, the talks broke down. Zhao Changpeng’s team are reported to have told Sequoia that their offer of $80 million for almost 11% of the business was an undervaluation.
It was around this time that a second venture capital firm set forth an alternate offer to Binance. IDG Capital proposed the injection of two rounds of funding into the company – the first $400 million, followed up by a subsequent $1 billion.
Sequoia claim that talks with IDG Capital violated the exclusivity rights agreed between themselves and Zhao. Despite efforts to settle the disagreement through arbitration, it became public when Sequoia requested an injunction barring Zhao from negotiating with other investors.
Bloomberg report that a spokeswoman from Binance told the publication that the firm were unable to comment on the matter immediately. They go on to state that Zhao has previously told them that his exchange platform will only consider partnering with investment firms if they can help with securing licenses and working with financial regulators.
Whilst Zhao is yet to provide proof of his company’s valuation, he claims that Binance is worth around $3 billion at a conservative estimate. Like the valuation, much of the exchange platform’s operations are kept secretive – such as the location of their offices and servers. However, for now Binance is thought to be based in Hong Kong – based on Zhao’s own earlier statements.
Recently though a move to a more friendly territory seems to be on the cards. Binance announced last month that they were considering relocating to Malta – a country already known for its lax taxation legislation and one that is actively pursuing regulations that lawmakers hope will make the island nation a haven for cryptocurrency startups. In late March, Prime Minister Dr Joseph Muscat himself addressed digital currencies with optimism in a political speech:
“I have no doubt that it [cryptocurrency] will form the base of a new economy in the future. Just as we attribute value to pieces of paper, so too will future generations attribute value to electronic storage systems.”
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