The founder and CEO of Binance, Changpeng Zhao, is claiming that Sequoia Capital China tarnished his reputation and prevented him from raising funds at favorable valuations.
Per a May 20 filing submitted to the Hong Kong High Court, CZ is requesting for a hearing on an order for “immediate summary of assessment of damages.”
The court’s website indicates that a hearing for the case HCMP 2770/2017 is scheduled for June 25 between SCC Venture VI and Zhao.
The application asks for an inquiry to see if Zhao “has sustained any and what damages” due to the injunction order obtained by Sequoia against him on December 27, 2017.
Zhao demands that if it’s decided that “any such damage has been sustained,” Sequoia should compensate him the amount determined during the inquiry.
“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,” he stated in the new filing.
Zhao’s punch-back comes after the Hong Kong International Arbitration Centre’s (HKIAC) decision last December, which dismissed Sequoia Capital’s accusations that Zhao had violated an exclusivity agreement when discussing a Series A equity funding with Binance.
The case started after Sequoia Capital obtained the injunction order in an ex parte without informing CZ, and then filed a notice for arbitration in January last year.
A few months after, a Deputy High Court Judge ruled that the company “was wrong to pursue the ex parte application without notice to Zhao” because there was no evidence or explanation as to why no efforts were made to involve both parties.
“I agree that the use of the ex parte procedure without notice to D. [Defendant, Zhao] was an abuse of process,” the judge stated. “If the Injunction were not already spent, I would have set it aside on that basis alone.”
In the following months, the parties proceeded with the arbitration, submitting various evidence before the three-member tribunal at the HKIAC.
Per the final decision made last December, the Tribunal dismissed Sequoia’s allegations that Zhao had breached exclusivity according to the findings that the negotiation with IDG Capital was for a Series B round funding.
In its decision, the Tribunal stated that it “finds that that the negotiations with IDG were not in respect of a ‘rival transaction’ to the Series A Financing but were in respect of a proposed Series B financing transaction which was not in competition with the Series A Financing and which did not become a Series A Financing.”