Binance CEO Sues VC Firm Sequoia for Reputational Damages

[Mercury]

Changpeng Zhao, the CEO of leading cryptocurrency exchange binance, has reportedly sued well-reputed venture capital firm Sequoia over reputational damages allegedly caused by a lawsuit the VC firm filed against Binance that was dismissed.

According to a filing submitted to the High Court in Hong Kong that was obtained by CoinDesk, Changpeng Zhao, referred to as CZ, claims Sequoia Capital China, a unit of Sequoia, significantly damaged his reputation and is looking for compensation.

This, according to the CEO, prevented him from raising money at a proper valuation for Binance. Sequoia reportedly damaged his reputation through a lawsuit filed in April of last year over a funding deal that went awry.

A hearing for the case is set to take place on June 25 between CZ and SCC Venture VI, a special purpose vehicle of Sequoia Capital China. An inquiry to determine whether Zhao “sustained any and what damages” is being demanded, over an injunction order Sequoia obtained in late 2017 that reportedly prevented CZ from raising funds in March of 2018.

Sequoia’s initial lawsuit was dismissed by the Hong Kong High Court, with the VC firm having to repay Binance the legal fees required for its legal representative.

In the filing, the CEO of Binance stated:

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.

Sequoia is notably seen as one of the most well-reputed venture capital firms focusing on tech startups, and available data shows it operates 22 funds across the globe and raised $15.3 billion so far.

Meanwhile, Binance has been going through a rough few weeks. The exchange was hacked for 7,000 BTC earlier this month, and considered rolling back the Bitcoin blockchain to recover the stolen funds, a move that saw him be heavily criticized on social media.

Binance recently published an extensive blog post recapping the incident that detailed hackers managed to control a number of Binance user accounts and structured large withdrawals from these. More recently, various users complained they lost funds after experiencing lag on the trading platform.

Source