Binance’s CZ Seeks Compensation From Sequoia for Alleged Reputational, Financial Damage
CZ is reportedly seeking damages from VC firm Sequoia Capital China for having ostensibly hurt his reputation.
Changpeng Zhao, the CEO and founder of major crypto exchange Binance, is seeking damages from venture capital firm Sequoia Capital China for having ostensibly hurt his reputation and unjustly prevented him from raising capital during its now-dismissed legal challenge against him last year. A Binance spokesperson shared the news with Cointelegraph on May 23.
Attorneys for Changpeng Zhao — better known in the industry as CZ — filed an application on May 20 with the Hong Kong High Court, seeking an inquiry into whether CZ “sustained any and what damages” as a result of the ex parte injunction order Sequoia obtained against him in December 2017.
The injunction, later found to have been improperly obtained, had put a moratorium on any financing deals with other investors until March 1, 2018. CZ’s filing states:
“Damages hearing on 25 June 2019 will determine entitlement to and subsequently the scale of damages for (i) the lost chances for fund raising and (ii) damage to reputation.”
Should the court determine that Zhao indeed sustained any such damages, the CEO seeks compensation of an unspecified amount — to be determined at the inquiry — from Sequoia.
According to the Hong Kong judiciary website, a hearing for the case (HCMP 2770/2017), is currently scheduled to be held on June 25.
As reported, the dispute between CZ and the VC firm began in December 2018, when Sequoia obtained an ex parte injunction without notice against the CEO for having allegedly breached an exclusivity agreement during negotiations for a Series A equity financing deal.
In April 2018, a deputy judge at the High Court of Hong Kong ruled that the ex parte injunction had been improperly obtained and constituted an abuse of the ex parte procedure process by Sequoia, ordering the firm to compensate the costs of CZ’s legal proceedings.
In December 2018, according to a Binance spokesperson, a three-member tribunal at the Hong Kong International Arbitration Center dismissed Sequoia’s claims against Zhao, finding that his talks in alleged breach of exclusivity were in fact for a separate, Series B round financing which was not in competition with Sequoia’s Series A talks.